Please ensure Javascript is enabled for purposes of website accessibility

Apple Wants to Go to the Movies

By Evan Niu, CFA – Sep 27, 2019 at 1:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If the Mac maker really wants to win an Oscar, it will need to release its original films in theaters.

With the launch of Apple's (AAPL 1.37%) video-streaming service, Apple TV+, just over a month away, the company is looking for ways to expand its horizons. Apple is considering releasing its exclusive feature-length movies in theaters before subsequently adding them to its online catalog, according to a report this morning from The Wall Street Journal.

Here's what the tech giant may be up to.

Apple TV+ logo

Image source: Apple.

Chasing an Oscar

Apple might release films several weeks before the movies are available on Apple TV+, abiding by long-standing industry conventions. In contrast, video-streaming leader Netflix (NFLX -1.12%) usually dictates that the few movies that it releases in theaters come out simultaneously with their online debuts, the report notes. That strategy has irked the theater industry, which relies on that exclusivity window to juice ticket sales: Why go to a theater if the movie is available online for far cheaper?

The first such film is expected to be On the Rocks, directed by Sofia Coppola and produced with A24, the renowned indie film studio that Apple struck a multiyear partnership with last November. That deal is part of Apple's grand ambitions to score an Oscar. A24 has 25 total Oscar nominations under its belt, including a handful of wins such as Moonlight.

Director J.J. Abrams recently turned down a $500 million offer from Apple in favor of a $250 million deal with AT&T's WarnerMedia, and the lack of theatrical distribution played a role in that decision, according to the Journal.

It's important to note that theatrical distribution remains a key requirement for Oscar eligibility, although there has been much debate about revamping those rules amid the industry's changing landscape and shift toward online streaming.

"Our rules currently require theatrical exhibition, and also allow for a broad selection of films to be submitted for Oscars consideration," Academy President John Bailey said in a statement in April. "We plan to further study the profound changes occurring in our industry and continue discussions with our members about these issues."

Fame, not fortune

The plan isn't about money -- Apple makes enough of that already. Releasing its films in theaters is really all about the publicity and branding that comes with theatrical releases. Services chief Eddy Cue has already made it clear that the company is focusing primarily on quality over quantity, at least initially as it continues to invest in its original content library.

At the same time, Apple is aggressively pricing Apple TV+ at $5 per month and also giving away a year of free service bundled with hardware purchases in an implicit acknowledgment that Apple TV+ won't have a particularly strong value proposition compared to competing services. If the Mac maker can score some prominent awards, that could potentially convince more people to sign up.

Evan Niu, CFA owns shares of Apple and Netflix. The Motley Fool owns shares of and recommends Apple and Netflix. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.