In late 2018, Apple (AAPL) and A24—the prestige independent studio behind films like Lady Bird and Moonlight—came to a multiyear agreement that will see the latter company take the reins on multiple films for the former. Apple, hungry for content to fill out its Apple TV+ library and to better compete with the established streamers, gets to partner with one of the premiere art house studios while A24 adds another impressive distribution arm to its growing network that already includes DirecTV and Amazon (AMZN). Now, it appears as if this move was part of a larger strategy by Apple to legitimize its original programming by competing for Academy Awards.
Apple is reportedly planning to finance six small-budget movies per year with the specific goal of winning Oscars, according to The New York Post. The market-leading Netflix (NFLX) has long lusted after Hollywood’s top honors, so beating them to the punch to become the first streaming service to claim a Best Picture award would make waves throughout the industry. Per the outlet, Apple is looking to spend between $5 million and $30 million per project and has been approaching “elevated” directors and other high-profile names in film to begin formulating a development slate. A24 will likely play a key role in this pursuit—the studio is developing a Sofia Coppola-directed film for the streamer starring Bill Murray and Rashida Jones—though it won’t be the only studio Apple uses.
While Apple has lined up a handful of intriguing star-driven series for Apple TV+, set to launch later this year, it still lacks the library size to properly compete with Netflix, Amazon Prime Video, Hulu and the incoming Disney (DIS)+. As such, there has been speculation that Apple could be in the market for a studio of its own with Sony Pictures Entertainment, A24, Lionsgate and MGM all mentioned as possible acquisition targets. Sony’s CEO shakeup in early 2018 was thought to have opened the door for such a sale.
On top of the concerns regarding its content slate—as well as a frustrating lack of transparency about pricing and delivery methods—there have been reports that Apple TV+ is only interested in non-controversial material. Apple CEO Tim Cook reportedly halted the development of an original show based on rapper Dr. Dre’s life due to its adult content, which included sex, drugs and violence. Last year, Bloomberg described Apple’s strategy as “conservative and prickly.” The thinking is that Apple doesn’t want its streaming service disrupting its primary corporate function: selling products.
Apple has put together an enticing lineup of early content, including a splashy drama from Reese Witherspoon and Jennifer Aniston as well as content produced by Oprah Winfrey and J.J. Abrams. It also boasts the resources to outspend all of the emerging streaming services thanks to its $250 billion cash reserves. But all indications suggest the tech giant is still acclimating to the challenges of original programming. The ongoing transition from Silicon Valley to Hollywood will be fascinating to watch. Apple has the potential to realign Hollywood’s hierarchy, but if they aren’t careful, they could also lose billions while fading out of the contention in the streaming wars.