Streaming revamp: Apple rethinks its movie strategy after string of misses

By Nicole Sperling

When Apple won a bidding war in 2021 for the rights to make the action comedy Wolfs with George Clooney and Brad Pitt, it did so in part because it promised the stars it would put the movie into a large number of movie theatres.

“Brad and I made the deal to do that movie where we gave money back to make sure that we had a theatrical release,” Clooney said last year in an interview with the Hollywood trade publication Deadline.

But this month, just six weeks before the film was set to show up in thousands of theatres around the United States, Apple announced a significant change in plans. Wolfs will now be shown on a limited number of movie screens for one week before becoming available on the company’s streaming service on September 27. (Internationally, it won’t appear in theatres at all with the exception of the Venice Film Festival, where it will premiere on September 1.)

The film’s director, Jon Watts, told Vanity Fair that he had found out about the change in plans only days before the announcement. “The theatrical experience has really made an impression on me, of how valuable this thing is and how important it is,” Watts said. “I always thought of this as a theatrical movie. We made it to be seen in theatres, and I think that’s the best way to see it.” Despite the filmmakers’ desires, the about-face follows a middling run at the box office for Apple, which began releasing films into theatres around the country via partnerships with traditional studios in October.

It joined forces 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 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 but grossed just $40 million worldwide despite the star power of Scarlett Johansson and Channing Tatum.Apple’s deal with Sony has it splitting marketing and distribution costs. Once those costs are recouped, the studio receives a distribution fee. Theatre owners keep roughly 50 per cent of the gross.

“None of Apple’s films have done well,” Stephen Galloway, the dean of Dodge College of Film and Media Arts, said in an interview. “Financially, you might think it doesn’t matter. This is a company worth $3.3 trillion. But psychologically, it does. “Apple’s brand is quality, cutting-edge, sleek, refined, forward-looking, and so now you’re tarnishing that brand with what seems like an old-fashioned, not-relevant, not-part-of-the-zeitgeist slate.”

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

Apple, which declined to comment for this article, is not alone in its box office struggles. This year has seen some really big hits (Inside Out 2, Deadpool & Wolverine) and some notable misfires (The Fall Guy, Furiosa: A Mad Max Saga). And Apple has seen some of its films perform well in streaming.

This month, it released The Instigators, with Matt Damon and Casey Affleck, on Apple TV+ after one week of a limited theatrical release. The film helped the streaming service add about 50,000 subscribers, more than the number Napoleon accounted for when it was released last year, according to the data firm Parrot Analytics. Another data firm, Luminate, reported that The Instigators, which was directed by Doug Liman, was the most-watched streaming film 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 he reported to executives at company headquarters in Cupertino, Calif., while  Dentler reported to Van Amburg and Erlicht in Los Angeles. Strauss left after 16 months and hasn’t been replaced.

The leadership team does hold the title of the first streaming service to win the best picture Oscar, which it did in 2022 with “CODA.” But its recent theatrical performance is not dissimilar from the bumps that Amazon Studios endured soon after Jennifer Salke, a veteran NBC executive, took over in 2018.

Soon after taking the reins, Ms. Salke spent close to $50 million at the Sundance Film Festival for the rights to a handful of movies. Once the first film — “Late Night,” starring Emma Thompson and Mindy Kaling — bombed at the box office, Ms. Salke quickly shifted her strategy. Future films went straight to streaming, which limited the financial risk and the public ridicule that often accompanies box office disappointments.

Ms. Salke has since hired Sue Kroll and Courtenay Valenti, two veteran executives from Warner Bros., to help improve her movie fortunes, both at the box office and for streaming films. Amazon now intends to more than double the number of movies it releases theatrically by 2027.

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

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

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

CAA, the agency that represents Mr. Clooney, Mr. Pitt and Mr. Watts, did not fight the last-minute move, since the lack of promotion could have led to a theatrical underperformance affecting its clients’ reputations, the people said.

A spokesperson for CAA declined to comment.

Both competitors and those who work for Apple are rooting for the company’s success. With the overall box office down 15 percent from last year, Paramount laying off 15 percent of its employees before its pending merger and Warner Bros. Discovery struggling with its enormous debt load, Hollywood would love for Apple to keep spending money on movies. It seems likely to be disappointed.

This spring, top executives held a meeting at company headquarters. The result was a new edict, according to two people familiar with the details, who spoke on the condition of anonymity to discuss an internal gathering. Apple’s studio would make one or two event-size films a year, with big budgets and expansive 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 movie “F1,” from the director Joseph Kosinski (“Top Gun: Maverick”), in partnership with Warner Bros.

Mr. Pitt is playing the leading role.

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