Assessing Apple’s $700 Million Investment in ‘Killers of the Flower Moon,’ ‘Napoleon,’ and ‘Argylle’: Was it a Blockbuster Gamble Worth Taking?

Apple’s presence in the Oscars with historical epics “Killers of the Flower Moon” and “Napoleon” is notable, accumulating a total of 13 nominations. This positions Apple as the second-highest contender among major studios and streaming platforms, trailing behind Netflix with 18 nominations and sharing the same count as Universal and Searchlight. The recognition at the Oscars underscores Apple’s growing impact in the film industry.

Apple’s foray into film production has been marked by ambitious projects, notably Martin Scorsese’s “Killers of the Flower Moon,” which incurred a noteworthy cost of $215 million, including pandemic-related expenses. The tech giant has invested over $700 million in creating and marketing three films, with “Napoleon” ($221 million), “Killers of the Flower Moon” ($157 million), and “Argylle” ($88 million) contributing to a combined box office revenue of $466 million worldwide. While Apple is making strides in the entertainment industry, the substantial investment prompts scrutiny regarding the financial viability and return on investment for these high-profile productions.

While the substantial production costs of “Killers of the Flower Moon” and “Napoleon” raised eyebrows, Apple asserts that both films are profitable, thanks to ancillary revenue sources. These projects have demonstrated success on the Apple app store, with “Killers” ranking among the top 10 highest-grossing films for an extended period. The early performance of “Napoleon” on Apple TV+ is yet to be fully assessed since its debut on March 1. “Killers of the Flower Moon” has notably become the most-viewed film on the platform within its initial 45 days, driving new subscriptions for Apple TV+.

In contrast to Netflix, Apple recognizes the significance of theatrical releases in elevating the visibility of its films. Both “Killers of the Flower Moon” and “Napoleon” achieved a notable 58% peak U.S. awareness score, as per NRG analytics. This strategy aligns with Apple’s approach of positioning Apple TV+ as the exclusive platform for high-awareness theatrical movies, aiming to enhance the value proposition for its subscribers.

While “Killers of the Flower Moon” and “Napoleon” didn’t generate the expected impact, “Argylle” with its $200 million budget faced challenges. Apple’s substantial financial strength allows it to absorb such costs, but there’s speculation, even on Wall Street, about whether the reported $1 billion annual film spend might have been more effective with a greater quantity of content rather than focusing on a few high-budget productions.

Wedbush Securities’ Dan Ives notes that Apple’s films have demonstrated impressive quality and attracted demand for Apple TV+. However, the challenge lies in the quantity of content. Despite achieving high quality and winning Oscars, Apple lacks an extensive library in the ongoing content competition. Since 2017, Jamie Erlicht and Zack Van Amburg, leading Apple’s film and TV operations, have taken a meticulous approach to construct the studio’s library from the ground up.

Apple acknowledges the significance of theatrical releases not only for box office revenue but also for cultural impact. However, the criteria for deciding which films go to theaters and which head directly to the Apple platform remain unclear. Despite being in its early stages, Apple’s studio business has achieved notable success, winning the best picture Oscar for “CODA” and securing numerous Emmy awards. While Apple, Netflix, and Amazon are all making substantial investments in content, questions arise about the return on investment and the strategic decisions behind theatrical releases.

The entertainment industry, including Apple, is reportedly undergoing a course correction on budgets after overspending in the content arms race. While Apple continues to invest in high-budget projects like the Formula One movie starring Brad Pitt, the studio is diversifying its portfolio with more modest bets, including a dark comedy starring Keanu Reeves, a Little Richard biopic produced by Ron Howard and Brian Grazer’s Imagine Entertainment, and a documentary about Formula One racer Lewis Hamilton. This shift reflects a broader trend in the industry as studios reassess spending strategies.