Theatrical as a Loss-Mitigator for Streaming
Plus: a modern horror classic assigned!
Lucas Shaw and Thomas Buckley report in Bloomberg that Apple is looking to spend a billion dollars on movies that will be released in theaters. From auteur-driven epics like Martin Scorsese’s Killers of the Flower Moon and Ridley Scott’s Napoleon to thrillers like Matthew Vaughn’s Argylle, expect to see the Apple logo on big screens more frequently.
The streaming-first studios have dabbled with movie theaters, of course. This weekend Apple has the Vaughn-produced Tetris hitting some big screens (or, well, at least one: it’s playing my local Alamo Drafthouse; keep an eye out and you may just spot me there at some point next week). Amazon is releasing Air in a bunch of theaters in April ahead of its Prime Video debut. Glass Onion: A Knives Out Mystery earned a two-week run on 600-some screens a month or so ahead of its release on Netflix. I myself have seen several other big-budget Netflix films—Army of the Dead, Red Notice, and The Gray Man—in theaters.
Apple’s move here is interesting for a couple of reasons. This is a way to please old-school, big-name auteurs who still believe in the theatrical experience—note the names Scorsese, Scott, and Vaughn above—and pry them away from Netflix, which remains skeptical of the value of putting movies in theaters.
It also seems clear that they’re looking, largely, to outsource distribution, understanding that getting a movie on 3,000 screens and convincing 20 to 30 million people to buy tickets to something is not, exactly, in their skillset. Outsourcing this stuff is expensive—another studio will take a cut of the gross off the top, and not a small one—but I don’t think Apple cares that much. Because it seems like they view theatrical presentations as a loss leader of sorts for their streaming service.
“The company also views theaters as a way to build awareness for its TV+ streaming service,” Shaw and Buckley report. “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+.”
The economics of streaming remain vaguely mysterious to me; I still don’t really understand what Netflix gets out of spending $200 million on a two-hour movie that disappears from the public consciousness six weeks after it debuts rather than spending $200 million on ten TV shows that are ten hours each and hoping one of them turns into the next Ozark or Squid Game.
Maybe Apple understands the bedrock truth of the movie (as opposed to the TV) business: big-budget movies only really make sense if you’re going to capture a big chunk of change at the box office, the one place where you can earn a billion dollars on a single project. Now, I don’t think Napoleon or Killers of the Flower Moon are billion-dollar projects. But they are movies that can earn at least a chunk of their budget back in theaters, and those theatrical runs will in turn serve as massive advertising campaigns for the streaming service Apple thinks is the future.
Perhaps we can think of theatrical not as a loss leader but as a loss-mitigator, then.
Lots of companies sell products at below cost to get you in the door to buy other things that are large profit centers. These are known as loss-leaders. My favorite example of this was Best Buy and Circuit City’s mid-90s-to-mid-00s practice of selling CDs (and then DVDs) for $7 to $10, all in the hopes of convincing people to buy washing machines. As a teenager, I didn’t have much need for a washing machine, but I did want to build a music and movie library. Truly a golden age.
Apple’s idea here is similar, but perhaps more fiscally sound if you’re going to spend an enormous amount of money on a movie anyway. A theatrical release is a way to mitigate losses on any individual film: you’re probably not going to make enough to cover the cost of a $200 million Scorsese movie in theaters, but you can absolutely recover some of that via ticket sales. The advertising campaign can also be a way to gin up buzz for AppleTV+, securing more signups at $6.99 a month. And, as the Cinema Foundation noted in their report on the state of movie theaters, the most successful movies on streaming tend to be the ones that got big theatrical releases.
Speaking of the Cinema Foundation, I spoke to its president, Jackie Brenneman, this week on the Bulwark Goes to Hollywood. We had a really fun chat, largely because I love theaters and desperately want them to survive. No softball interview has ever been as soft as this one, that I can guarantee.
You can sign up for the show via Apple here, or just wait for it to hit your inbox tomorrow!
This week I reviewed John Wick: Chapter 4. I dunno if they’re going to make another one of these movies, but if they don’t, this is a fitting way to go out: epic (to the point, possibly, of bloat) and entertaining and manic and, oddly, more than a little melancholy. I love the way these films pivoted from pure high-concept greatness to something a bit deeper, an extended meditation on the nature of power and where it rests: with systems, or with people. Best original action series of the last decade and I don’t think anything else is particularly close.
Speaking of John Wick: Chapter 4, this week Peter, Alyssa, and I used our bonus episode of ATMA to pay tribute to Lance Reddick, who, sadly, died a couple of weeks ago just ahead of the film’s premiere. He’s wonderful in the latest Wick as he was in just about everything. This is an episode for paying members only; if you’d like to listen, you can do so for free by signing up for a trial at the button below:
Congrats again to Adam Sandler, winner of this year’s Mark Twain Prize.
Domestic violence charges against Rick and Morty co-creator Justin Roiland have been dropped.
Assigned Viewing: ‘The Ring’ (Paramount+)
I threw this on because I needed a little inspiration for another project I’m working on, and it’s simply wild how good The Ring is even now, 20 years later, a whole subgenre of knockoffs trailing in its wake. How much better it looks than the knockoffs that followed, how great the fake-out ending is. I understand why Gore Verbinski is in director’s jail following the disaster that was The Lone Ranger and the mini-disaster that was A Cure for Wellness, but man. It’s too bad. The guy knows how to shoot a movie.
I really do hope Netflix rethinks their approach to theaters. Does every movie need to be on 4000 screens? No. But to use Glass Onion as an example, I went to see that Thanksgiving weekend at the Alamo in NE DC and it was completely sold-out. At some point, Netflix is going to have to realize just how much money they're leaving on the table here and adjust their strategy, at least for some films
The Apple play here is exactly right. I think I might have even said this in another comment on another post. Put movies in theaters to a) make directors happy, b) make some money back, and c) build buzz for the titles. I believe ESG has shown that films that play in theaters before going to streaming do better on the streaming platforms.
On the Best Buy note...my buddy and I used to live for the buy 2 get 1 free DVD sales at Best Buy. Just two dudes in their early twenties pumping their fist in the air while going through the Sunday paper.