Apple plans to spend US$1-billion a year to produce movies that will be released in cinemas, according to people familiar with the company’s plans, part of an ambitious effort to raise its profile in Hollywood and lure subscribers to its streaming service.

Apple has approached movie studios about partnering to release a few titles in cinemas this year and a slate of more films in the future, said the people, who asked not to be identified because the plans are private.

The list of potential releases includes Martin Scorsese’s Killers of the Flower Moon, which stars Leonardo DiCaprio; the spy thriller Argylle, from director Matthew Vaughn; and Napoleon, Ridley Scott’s drama about the French conqueror. A spokesman for Apple declined to comment.

The investment is a significant increase from years past. Most of Apple’s previous original movies have either been exclusive to the streaming service or released in a limited number of cinemas. The company has pledged to put movies in thousands of cinemas for at least a month, said the people, though it hasn’t finalised any plans.

While Apple has agreed to theatrical releases in order to please talent and outmanoeuver competitors for projects, the company also views cinema as a way to build awareness for its TV+ streaming service. If the company is going to spend hundreds of millions of dollars on a Scorsese movie, it wants to turn that into a cultural event. Apple TV+ is estimated to have between 20 million and 40 million subscribers, fewer than rivals such as Netflix and Disney+.

Fees, budgets

Apple still hasn’t figured out how it will distribute these movies in cinemas. The company doesn’t have the expertise internally to release movies in thousands of cinemas worldwide at once, which is why it has approached third-party distributors. But first Apple needs to come to terms on distribution fees and marketing budgets with potential partners. Movie studios can spend $100-million or more to market their biggest titles, far more than streaming services spend promoting new shows or movies.

Paramount Pictures will release the Scorsese movie in cinemas because the project originated at that studio, and will collect a 10% distribution fee. The studio hasn’t agreed to distribute other titles for Apple.

Like most streaming services, Apple TV+ spends more of its budget on TV shows. Its first huge hit was the comedy series Ted Lasso. Yet Apple has been funding movies from the inception of its Hollywood studio and the smartphone maker’s ambitions in film have grown since it won an Academy Award for best picture for 2021’s Coda. Apple acquired that movie at the Sundance Film Festival for a record $25-million and distributed it simultaneously in cinemas and on TV+.

Its previous movies didn’t receive the kind of theatrical release planned for the upcoming titles. Coda earned less than $2-million at the box office. Cherry, a crime drama starring Tom Holland, appeared in select theatres for a couple of weeks in 2021. Apple didn’t report its ticket sales.

Tech giants Apple and Amazon.com are increasing their investment in entertainment at the same time they are cutting costs elsewhere. Amazon has fired thousands of workers, while Apple is cutting costs without letting staff go so far.

Amazon, which acquired Metro-Goldwyn-Mayer, the studio behind the James Bond films, for $8.5-billion, aims to make between 12 and 15 movies annually that will get a theatrical release. Paramount, Walt Disney Co and Warner Bros Discovery are looking to increase their output of movies for cinema after experimenting with distributing films on streaming services alone.

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The one outlier in this return to the cinema is Netflix, which wants its movies to appear in theatres and online at the same time, or within a couple weeks. Major cinema chains have refused this arrangement. Netflix spends more on original movies than Amazon or Apple. — Thomas Buckley and Lucas Shaw, (c) 2023 Bloomberg LP