Streaming revamp: Apple rethinks its film strategy after a series of failures | World News

The film’s director, Jon Watts, told Vanity Fair that he had learned of the change of plans just days before the announcement. “The experience in the theater has really struck me, how valuable this thing is and how important it is,” Watts said. “We always thought of this as a movie for the theater. We made it to be seen in theaters, and I think that’s the best way to see it.” Despite the filmmakers’ wishes, the about-face comes after a lackluster box office run for Apple, which began releasing movies in theaters nationwide through partnerships with traditional studios in October.

Apple teamed up with Paramount Pictures to release Martin Scorsese’s Killers of the Flower Moon, which cost $200 million to make and grossed $157 million worldwide. Ridley Scott’s Napoleon (Sony) cost $200 million to make and grossed $221 million worldwide. The $200 million spy thriller Argylle (Universal) grossed $96 million. And most recently, Apple teamed up with Sony again to release Fly Me to the Moon, which cost $100 million to make but grossed just $40 million worldwide despite the star power of Scarlett Johansson and Channing Tatum. Apple’s deal with Sony calls for them to split marketing and distribution costs. Once those costs are recouped, the studio receives a distribution fee. Theater owners keep about 50 percent of the gross.

“None of Apple’s movies have been successful,” Stephen Galloway, dean of the Dodge College of Film and Media Arts, said in an interview. “Financially, you might think it doesn’t matter. This is a $3.3 trillion company. But psychologically, it does matter. Apple’s brand is quality, cutting-edge, elegant, refined, forward-thinking, and now they’re tarnishing that brand with what seems like an outdated, irrelevant, out-of-touch list.”

Apple is still planning a wide theatrical release next July for its F1 movie, in partnership with Warner Bros.

Apple, which declined to comment for this article, isn’t alone in having box office issues. This year has seen some big hits (Inside Out 2, Deadpool and Wolverine) and some notable flops (The Fall Guy, Furiosa: A Mad Max Saga). And Apple has seen some of its movies perform well on streaming.

This month, it released “The Instigators,” starring Matt Damon and Casey Affleck, on Apple TV+ after a week of limited theatrical release. The film helped the streaming service add about 50,000 subscribers, more than “Napoleon” had when it debuted last year, according to the data firm Parrot Analytics. Another data firm, Luminate, reported that “The Instigators,” directed by Doug Liman, was the most-watched streaming movie across all platforms during its first week of release. Ricky Strauss, Disney’s former president of marketing, was hired last year to oversee creative marketing and strategy but reported to executives at the company’s headquarters in Cupertino, California, while Dentler reported to Van Amburg and Erlicht in Los Angeles. Strauss left after 16 months and has not been replaced.

The management team holds the title of the first streaming service to win the best picture Oscar, which it did in 2022 with “CODA.” But its recent performance in theaters is not unlike the bumps Amazon Studios suffered shortly after Jennifer Salke, a veteran NBC executive, took the helm in 2018.

Shortly after taking the reins, Salke spent close to $50 million at the Sundance Film Festival for the rights to a handful of films. Once the first film — “Late Night,” starring Emma Thompson and Mindy Kaling — failed at the box office, Salke quickly changed his strategy. Future films were streamed directly, limiting the financial risk and public ridicule that often accompanies box office disappointments.

With “Wolfs,” Apple substantially outbid its competitors, according to three people familiar with the process who spoke on condition of anonymity to discuss financial terms, paying Clooney and Pitt more than $35 million each and Watts (“Spider-Man: Homecoming”) more than $15 million.

Sony Pictures, which had agreed to distribute the film and split marketing costs with Apple, was set to begin a national marketing campaign during the Paris Olympics, but Van Amburg canceled it at the last minute, according to three people familiar with the marketing plans, who spoke on condition of anonymity to discuss an internal matter.

Apple executives in Cupertino were already questioning the entertainment unit over the amount of money being spent on movies, and the people said there was a mindset within the company not to risk public disappointment if a film did not succeed at the box office.

CAA, the agency that represents Clooney, Pitt and Watts, did not challenge the last-minute decision, saying the lack of promotion could have led to poor theatrical performance that hurt its clients’ reputations, the people said.

A CAA spokesman declined to comment.

Apple’s competitors and employees alike are eager for the company to succeed. With total box office takings down 15 percent from last year, Paramount laying off 15 percent of its employees ahead of its impending merger, and Warner Bros. Discovery struggling with its massive debt load, Hollywood would love to see Apple keep spending money on movies. It seems likely to be disappointed.

This spring, top executives met at company headquarters. The result was a new edict, according to two people familiar with the details, who spoke on condition of anonymity to discuss an internal meeting. Apple’s studio would make one or two big-budget movies a year, with big budgets and wide theatrical releases. The rest of its films would have budgets of $80 million or less, the people said.

Apple is still planning a big theatrical release next July for its “F1” film, from director Joseph Kosinski (“Top Gun: Maverick”), in partnership with Warner Bros.

Mr. Pitt plays the lead role.

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