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Apple and Amazon Take a Pricey Gamble on Big Screen Movies – Will it Pay Off?

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Apple and Amazon are making a big bet on exclusive theatrical releases for their movies, with Apple reportedly planning to invest $1 billion per year to make films for cinema screens. The tech giants’ desire to work with theaters is a shift from their pandemic-era strategies and aims to promote their respective streaming services. However, the inherent risk is that audiences are pickier than ever and the market is saturated with content. Despite the risk, theater owners are encouraged by the shift, as it sets the tone for the importance of theatrical in the entertainment ecosystem.

The Tech Giant Apple making big bets on theaters

Tech giants Apple and Amazon are making a surprising bet on the big screen with exclusive theatrical releases for their movies, despite their focus on streaming services. The two companies are reportedly planning to invest billions of dollars to create films that will only be available in cinemas, a shift from their pandemic-era strategies. This move is seen as a way to promote their respective streaming services, Apple TV+ and Prime Video. By creating buzz around their movies on the big screen, the companies hope to attract more subscribers and get people to sign up for monthly subscriptions. This strategy will also help lure top talent who prefer their films to be shown in theaters.

According to Eric Wold, a media and entertainment industry analyst with B. Riley Securities, “There’s an advantage to streamers to put movies into theaters. You can get incremental revenue from other wells compared to going straight to streaming.” However, the market is saturated with content, and audiences are becoming increasingly picky, making it challenging for movies to stand out. Both companies will need to produce good movies, market them effectively, and get people to show up.

For theater owners, though, it is nothing short of euphoria to learn that more Hollywood companies plan to make movies for multiplexes. The cinema chains have struggled to recover from the pandemic as ticket sales remain down roughly 35% from pre-COVID, and lack of product is seen as the reason behind the downturn in attendance. Greg Marcus, CEO of Marcus Theatres, the fourth-largest U.S. circuit, says, “We believe in the importance of theatrical in an entertainment ecosystem. A theatrical run sets the tone and distinguishes product in a way that nothing else can…with the appropriate length window so the customer is incentivized to go to theaters.”

Apple has partnered with Paramount to release Martin Scorsese’s big-budget crime epic “Killers of the Flower Moon,” which stars Leonardo DiCaprio and Robert De Niro, in theaters sometime in 2023. Amazon is bringing Ben Affleck’s sports drama “Air” to multiplexes before it goes to Prime Video. It is not clear what else from Apple or Amazon will play in theaters, or if either company intends to report ticket sales akin to traditional studios.

This shift in strategy is a risky gamble for Apple and Amazon, but it could pay off. By promoting their movies on the big screen, the companies hope to attract more subscribers and get people to sign up for monthly subscriptions. If their movies perform well at the box office, it will also help to get big-budget movies into the black. The theater owners are encouraged by the shift, and it is believed that this move will set the tone for the importance of theatrical in the entertainment ecosystem. However, the companies need to produce good movies, market them effectively, and get people to show up to make this gamble pay off.

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