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Apple Inc. Takes Aim At Hollywood With First Feature Film

It's only a rumor at this point, but it's a credible rumor with real potential for AAPL

Apple feature film - Apple Inc. Takes Aim At Hollywood With First Feature Film

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Borrowing a page from Netflix, Inc. (NASDAQ:NFLX), iPhone maker Apple Inc. (NASDAQ:AAPL) is in negotiations to produce its first movie. The impending Apple feature film, according to the unconfirmed report from Bloomberg, would be an animated flick made by Irish studio Cartoon Saloon. No production has begun, and if does, it would take a year — at least — to complete the movie.

The most interesting aspect of the story: The film may be shown in theaters as well as streamed digitally via (presumably) Apple’s iTunes.

It is, realistically speaking, the inevitable and natural progression of Apple’s video ambitions. Moreover, barring the movie becoming a completely unforeseen disaster, it won’t likely be the last Apple feature film made.

The Stage Is Set

Not only has neither company confirmed the rumor supplied only by “people familiar with the matter,” the details of the deal are scant; everything you read above is the extent of what’s been pieced together.

Still, in light of the company’s trek down the home-grown video path, an Apple feature film is the next milestone to be met.

The iTunes store already offers a respectable, even if not vast, library of video content, including a couple of home-grown television programs … “Carpool Karaoke” and “Planet of the Apps.” It reportedly earmarked $1 billion to create much of its own programming to begin airing in early 2019, with more than a dozen different television shows in the works. Directors J.J. Abrams and M. Night Shyamalan and actresses Jennifer Aniston and Reese Witherspoon are just some of the names supposed to be involved.

Bolstering the credibility of at least some of the programs reportedly in the works is the fact that, last year, Apple hired two now-former Sony Corp (ADR) (NYSE:SNE) executives. Namely, Sony Pictures Television Presidents Jamie Erlicht and Zack Van Ambur boarded the Apple train almost a year ago to the day.

With that kind of know-how in-house, it would be a waste for the well-funded Apple to not at least tiptoe into the feature film business.

Sign of the Times

To that end, it may or may not have been a coincidence that reports of an Apple feature film surfaced the day after AT&T Inc (NYSE:T) was given the green light to acquire movie and television studio Time Warner Inc (NYSE:TWX).

The deal had been legally contested by the Department of Justice, which was concerned that an organization that was the medium as well as the maker of the media it delivered could prove anti-competitive. The court system didn’t see it that way, though, giving the acquisition the go-ahead that prodded cable giant Comcast Corporation (NASDAQ:CMCSA) to offer a bid for Twenty-First Century Fox Inc (NASDAQ:FOXA) that was better than the bid Walt Disney Co (NYSE:DIS) has on the table.

Apple wasn’t and isn’t facing such a regulatory hurdle, and contracting the production of a feature film raises no red flags with regulators. But, the company’s foray underscores the clear message that Fox, Disney, Time Warner and AT&T (and others) have been inadvertently sending of late — the traditional lines between the message and the messenger are being blurred, if not obliterated.

Still, if the rumored film in question does make it to theaters, that would be something of a first for a company of Apple’s non-studio ilk.

Bottom Line on an Apple Feature Film

Even if the whispers are true, the negotiations could break down with the two parties in question being unable to move forward. And, even if the negotiations are successful, a home-grown film still isn’t a game-changer for Apple. The iPhone is still the company’s big money-maker, and it will be for a while. For perspective, a film that drives $1 billion in ticket sales is considered a huge success, but Apple sold $38 billion worth of iPhones last quarter.

Still, if nothing else, an Apple feature film that wins some critical acclaim and at the same time provides a distribution platform that challenges the movie theater industry serves as great publicity for the iTunes store, and Apple’s ‘Services’ arm. While it’s television programming that will keep them interested in iTunes, such a movie is what may draw consumers into the iTunes ecosystem in the first place.

As of this writing, James Brumley held a long position in AT&T. You can follow him on Twitter, at @jbrumley.

Article printed from InvestorPlace Media, https://investorplace.com/2018/06/apple-inc-takes-aim-at-hollywood-with-first-feature-film/.

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