Apple enters Hollywood realm by signing deal to start making feature films

Apple has signed a deal with the studio behind Moonlight. Photo/File.

And the winner of the 2021 Academy Award for best picture is... Apple?

The computer giant announced a new deal on Thursday: It would be partnering with studio A24 to make a series of feature films. And while that seems like a comparatively minor announcement, it could change the game in some significant ways. It's sneakily consequential.

A24, if you're not familiar, is the boutique New York outfit that has been responsible for a slew of hipster-approved, Academy Award-recognised films including "Lady Bird," "Moonlight" and "Room."

Since its founding six years ago by a trio that includes the former partner of late Beastie Boy Adam Yauch, it has located commercial success and downtown cool. Its movies are handmade hipster-fests that also often manage to please audiences: in addition to its big three, they include, "Hereditary," "Eighth Grade," "A Ghost Story" and "Ex Machina."

Welcome to the party, Tim Cook.

"Apple has partnered with renowned film and television studio A24 on a multiyear agreement. In this alliance, A24 will produce a slate of multiple films for Apple," came the announcement from the tech juggernaut, which contained about as many details as the iPhone 7 has headphone jacks.

Even without those specifics, the significance was clear. Apple is installing itself as a producer of some of the most acclaimed films around, all without needing to take a single meeting or read one script off the slush pile first.

The Apple deal is what might be called a slow-burn surprise, coming after years of speculation about the company's film plans with no deals forthcoming.

Apple has certainly not been shy about hiring veteran television executives with their own vision, and these executives have been aggressive in going after established names for their series play. Not so on the film side. The company had to do something to make an entree into a world Netflix and Amazon had been flogging away at for years. Yet as time wore on, it seemed as though Apple wouldn't do anything at all.

That began to change with some low-key acquisitions around the Toronto International Film Festival in September, with a documentary titled "The Elephant Queen" and the animated "Wolfwalkers."

But the A24 deal, which neither side would comment further on, has the potential to shake up the entertainment world more profoundly.

On its face, Apple-A24 might seem like pretty small potatoes; why would a computer giant bother? A24′s highest-grossing movie ever took in US$49 million in the United States. To accountants in Cupertino, that's basically a few quick sales of the Apple Watch Series 4.

The studio also worked on Lady Bird. Photo/File.

The A24 deal also seems a little antithetical to Apple's video strategy overall. After all, the company has been courting the family audience, the four-quadrant audience, the all-American audience. Its biggest deals to date are with Oprah, Steven Spielberg and Jennifer Aniston - broadly popular personalities that don't scream Williamsburg and Echo Park.

But for Apple, cachet is everything. And it needs that now. A company that has prided itself on cool has reason to be worried about sustaining that on the entertainment side, with Netflix swiping its video lunch and Spotify some of its music swagger. Not to mention product optics among the next generation. With A24 movies, Apple will have a compelling palette of content to lure young subscribers to its video service.

For a company getting to the game later than competitors, this also doesn't hurt with the creative community. Netflix hasn't been able to say to prospective filmmakers it can win them major Oscars (it's yet to win one outside of smaller categories such as documentary and shorts); it has to resort to money and creative freedom to attract those types. With A24 at its back, Apple can suddenly dangle the Oscar pedigree and possibilities to talent. A little prime-time red carpet can go a long way.

For A24? The benefits also run deep. The company has been savvy about digital marketing but, with its boutique size, lacks the reach to go big. A partnership with a firm that has hundreds of millions of installed users around the world is hugely appealing. (Whether these movies will live there, or possibly even live there exclusively, is an open question. Could they go exclusive to the Apple service and away from theatres entirely? Certainly Apple might want that. Would A24?)

There's a possibility of a financial backstop too. The privately held A24 received hedge-fund investment from Guggenheim Partners to get off the ground. (A minority stake continues to be held by Valence Media, the spinoff of Guggenheim that also includes the Hollywood Reporter and the film and TV financier Media Rights Capital.)

But independent filmmaking is a notoriously unreliable business. Some of the most successful companies in history were later absorbed or dissolved. In fact, it's hard to think of an indie-film company that didn't happen to. A production deal with an insanely well-capitalized megalith can only help.

Questions lurk all around the deal. Will Apple be making other live-action movies? Which A24 projects will be sourced to the Apple deal - and who gets to choose? If A24 is already making a big-deal adaptation of Richard Wright's "Native Son" - as it is - does that go into the Apple deal or exist independently? That could make for some thorny talk between partners.

Maybe most important, how much freedom will A24 have in making these movies? Apple, after all, is an industry giant known for its close oversight of, and sometimes heavy pressure toward, various partners, on everything from pricing to revenue-sharing to exclusivity. A24? It has thrived on independence - indeed, its success has depended on doing things, from development to marketing, its own way.

Still, there aren't a lot of reasons to dislike this deal. It has become a flimsy trope to say a strategic partnership gives every side what it needs, only to later find the only thing it gave any side is debt and agita. Didn't pundits make similar boasts about AOL and Time Warner?

But A24 and Apple, because it marks a marriage of such different partners, really seems to offer benefits galore. Cachet, reach, money, an industry fast-track. Everyone here is getting something that helps them. And, even more critical, that they can't easily get anywhere else.

- Washington Post