What happened
Shares of Apple (AAPL 1.27%) climbed higher Thursday morning, adding as much as 2.4%. As of 3 p.m. ET, the stock was still up 1%.
What sent the tech giant higher were reports that the company would begin producing movies destined for the big screen.
So what
Apple plans to spend $1 billion per year to produce major motion pictures that it will release in theaters, according to a report by Bloomberg. The company is hoping to not only raise its stature in Hollywood but also attract a greater number of subscribers to Apple TV+ -- the company's streaming video service.
The iPhone maker has been in conversations with the major movie studios about bringing a number of its high-profile productions to cinemas this year, with additional opportunities on the horizon, according to the report. The list of likely releases includes the Martin Scorsese-helmed Killers of the Flower Moon, starring Leonardo DiCaprio; spy thriller Argylle, directed by Matthew Vaughn; and the Ridley Scott drama Napoleon, which chronicles the life of the French conqueror.
This would be a significant departure for Apple, which has released the vast majority of its feature films directly to its streaming platform, with just a few Oscar contenders receiving a limited release in theaters to make them eligible for Academy Award consideration.
Apple now plans to distribute some films to thousands of cinemas, allowing them to play for "at least a month," according to the report, which cites "people familiar with the company's plans."
Now what
While releasing blockbusters in theaters might well attract additional subscribers to Apple TV+, there are other reasons for Apple to choose this path. The company is always on the lookout for additional revenue streams, and becoming a major Hollywood movie producer could accomplish just that.
However, any new effort will pale in comparison to its flagship iPhone, which generated sales of more than $205 billion in fiscal 2022 (which ended Sep. 24), representing 52% of Apple's total revenue.
While any reasonable effort by Apple to increase its revenue would be beneficial to the company and its shareholders, it won't move the needle. Regardless, Apple stock remains a buy, as the investing thesis remains intact.
