Apple Finally Has a Box Office Hit With ‘F1.' What's Next for the Studio's Movie Strategy?

Yahoo

2 days ago

Champagne showers, a staple of Formula One races, may be reserved for the racetrack, but the mood at Apple was certainly celebratory over the weekend, as the big-budget 'F1' delivered the studio its first box office hit.
The film, starring Brad Pitt as a has-been Formula One driver who gets coerced out of retirement, generated $57 million domestically and $146.3 million in its opening weekend. Though 'F1' cost roughly $250 million to produce and requires several laps around the track to turn a theatrical profit, these initial ticket sales are encouraging for an original, adult-skewing tentpole.
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It's also a much-needed win for Apple. Six years into the tech giant's foray into the movie business, the company has fielded underperforming auteur-driven fare (Martin Scorsese's pricey 'Killers of the Flower Moon,' Ridley Scott's equally expensive 'Napoleon') and critically derided flops ('Fly Me to the Moon' and 'Argylle') but nothing that's been remotely commercial. Apple seemed to be rethinking its film strategy after deciding to curtail the theatrical release of 2024's 'Wolfs,' a tepidly reviewed crime drama with Pitt and George Clooney, to avoid the stench of another cinematic stinker.
So there was a growing internal sense that if a crowd-pleaser like 'F1' didn't work on the big screen, Apple would be forced to abandon the movie business in favor of television, where its successes include 'Severance' and 'Ted Lasso.' Though Apple's future film strategy won't hinge on a single film, insiders at the company now believe that momentum behind 'F1' gives Apple a reason to at least stay the course.
''F1' is going to be Apple's biggest release at the box office by far,' says David A. Gross, who runs the FranchiseRe movie consulting firm. 'This film looks like the successful business model Apple has envisioned and wanted to execute for several years.'
Back in 2023, Apple pledged to spend $1 billion annually on theatrical films. However, the studio has yet to make good on those ambitions. After director Spike Lee's 'Highest 2 Lowest,' which will receive a two-week run in cinemas this August through A24, Apple has no other big movies on the calendar in 2025 or 2026. Several films are either in production or development, including 'Mayday,' an action adventure starring Ryan Reynolds,' and a UFO feature from 'F1' director Joseph Kosinski and producer Jerry Bruckheimer.
Meanwhile, gears are turning on a potential sequel to 'F1,' according to knowledgable sources.
Moving forward, will 'F1' embolden Apple to charge ahead with theatrical and cultivate a robust film slate? Or, after the long and winding three-year journey to produce 'F1,' is the company more inclined to slow down and remain selective, taking only a few big swings with the right property and right people?
Here are four ways that Apple's film strategy could evolve in the wake of 'F1.'
Apple could commit to the big screen in the vein of Amazon MGM, which plans to release at least a dozen new movies a year. This option would likely require Apple to build out a distribution team, which is only realistic if the company is crafting a full slate of theatrical releases. Even a deep-pocketed company like Apple wouldn't be able to justify the money, resources and manpower to staff offices around the globe with just one to three movies annually on the schedule.
Advantages: Apple can control the quality of every facet of its distribution — from marketing to theater bookings — from top to bottom. In theory, theatrical hits could provide a halo effect to boost subscribers and viewership on Apple TV+ and move hardware sales that fuel its core business. Risks: There's a reason that only five to six studios have major global distribution arms; it's a massive undertaking to build the infrastructure. Disney, Universal and Warner Bros., for example, have hundreds if not thousands of employees staffed in regional offices around the world to handle the marketing, publicity and distribution of films in territories from China to the United Kingdom to the United Arab Emirates. Of course, nothing is cost-prohibitive to Apple with its $3 trillion market cap, but the company isn't in the business of making reckless financial decisions. Even Amazon MGM, after a few years of building up their domestic distribution branch, is partnering with Sony on the international rollout of upcoming films. Plus, who wants to be on the receiving end of box office scrutiny? Likelihood: Not very… at least not in the immediate future.
Who says Apple wants to become the next Disney? Apple can certainly afford to cherry-pick projects, choosing only to work with top directors and major stars on films that meet a certain criteria. And the studio is clearly willing to be the highest bidder to lure talent. In the vein of 'F1,' the studio could continue to fund one or two movies a year that align with the company's values and initiatives (in the case of 'F1,' some of the footage was filmed using the same camera technology that's in the newest iPhones). If Mattel plans to make a movie about the card game Uno, who says AirPods can't be the next big screen star?
Advantages: Apple doesn't have to invest big bucks into distribution, in case the company's future theatrical ambitions fail to pan out. Yes, Apple has all the money in the world, but its sterling reputation is the company's biggest commodity. So the studio doesn't want to be associated with flops. This path will allow Apple to be ultra selective while remaining what CEO Tim Cook describes as a 'toolmaker,' telling Variety in a recent cover story that 'we make tools for creative people to empower them to do things they couldn't do before.'Risks: Without a distribution team, Apple relies on other studios (Paramount, Sony, Universal and Warner Bros. among them) to put its movies in theaters. However, there's a risk of burning through distribution partners. That's because those film companies haven't been making money when Apple's movies fail to break even at the box office. In exchange for distribution efforts, studio partners have received a nominal 7-12% fee of the film's total global gross. But in the case of 'Argylle' (Universal), 'F1' (Warners) and 'Napoleon' and 'Fly Me to the Moon' (Sony), studios are splitting the upfront marketing costs with Apple, which could run $50 million to $75 million per studio per film. That's a lot of money for films like 'Argylle' and 'Fly Me to the Moon,' which failed to hit $100 million or even $50 million at the global box office (remember, theaters keep half of ticket sales too). And since theatrical releases are landing on Apple TV+ after leaving the big screen, rather than going to Peacock, HBO Max or Paramount+, there's not much of a downstream incentive for other studios, either. Likelihood: Very… at least in the immediate future.
Call it the Netflix effect. Apple could follow in the path of the streaming giant and grant films a qualifying awards run in select theaters for a few weeks instead of mounting a massive global theatrical release. After all, Apple became the first streamer to take home the coveted best picture Oscar for 'CODA,' a movie most people only watched on Apple TV+. That would entail more prestige plays and fewer all-audience tentpoles in the future.
Advantages: This allows Apple to avoid box office scrutiny. The company can spend however much it wants to attract filmmakers and stars without having to worry about an embarrassing financial flop to tarnish its brand. Already, Apple doesn't disclose the number of subscribers or financial results for Apple TV+, which it includes in its 'Services' segment along with revenue from music, games and the App Store. Risks: Theatrical has been a sticking point for major directors like Christopher Nolan and Greta Gerwig, and the big screen distinguishes Apple from Netflix, which doesn't grant traditional releases. And, as Netflix is quite familiar, most movie theater owners don't want to work with a company that views their business as an anachronism. So theater operators could refuse to play Apple's movies if the company doesn't commit to nationwide releases. (Of course, Apple could just buy a cinema like Netflix did with the Egyptian in Los Angeles and the Paris Theater in New York City). But worse, Apple would be risking its movies fading into obscurity. More people have been talking about 'F1' than have ever discussed Netflix titles like 'The Electric State,' 'Red Notice' or 'The Gray Man.' And if you've never heard of 'Fountain of Youth,' a kid-friendly heist adventure led by John Krasinski and Natalie Portman which Apple dropped directly on streaming in May, you'd be forgiven.Likelihood: Probably not, unless Apple isn't interested in working with the Spielbergs or Nolans of the world.
With $30 billion in cash reserves, Apple could buy a major studio or entertainment library. There's been speculation for years that Apple might acquire Disney but in truth, plenty of other film studios (Lionsgate or Warner Bros. included) would be more eager to sell off lots.
Advantages: Making that kind of purchase means procuring an arsenal of intellectual property as well as in-house expertise in terms of developing and distributing films. Then there's the windfall that comes from owning extensive film libraries, which generate revenue from licensing movies that have long been in their vault. Risks: So far, Apple has opted against writing that kind of big check because Cook feels it goes against the ethos of the company. 'I know that's a faster way into the business, but it didn't feel like Apple at the end of the day,' Cook told Variety. 'Apple should have something that we pour our passion into.' Plus, buying an institution comes with institutional headaches; there are facets of the movie business that are clunky and outdated — meaning there are plenty of reasons that Apple wouldn't want to shoulder the financial and organizational burdens. Likelihood: Depends on the fit…
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