Apple begins establishing a regional headquarters in Los Angeles and reevaluates its film strategy.

Apple has taken new steps by establishing a regional headquarters in Culver City, Los Angeles near the Sony Pictures Studios complex, with a total area of twenty-five thousand square meters. The technology giant aims to double its employees there to over three thousand by 2026. However, many actors, writers, and producers in Hollywood who were hoping that Apple’s expansions would boost its spending on film production will be disappointed.

Apple is reconsidering its film strategy after the disappointing results of some films produced with large budgets like “Killers of the Flower Moon” directed by Martin Scorsese, as well as films like “Napoleon” and “Argylle” and “Fly Me to the Moon”. The company has canceled its plans to release the action-comedy film “Wolfs”, starring George Clooney and Brad Pitt, in global cinemas, limiting its premiere to limited theaters, as it was launched on the “Apple TV+” streaming service on September 27th.

Apple plans to adopt a similar approach with many of the films on its slate, including the World War II film “Blitz”. Having previously planned to spend a billion dollars annually on large productions, it will not release any film widely in global cinemas until June 2025, when it returns with the film “F1” starring Brad Pitt.

This shift in the film strategy reflects a broader reset of Apple Studios in Hollywood, led by Zack Van Amburg and Jamie Erlicht. Management in Cupertino aims to control expenditures, according to a report by “Bloomberg”.

After spending over a hundred million dollars, and sometimes up to two hundred million dollars on producing some of the mentioned films, Apple will now focus on producing about twelve films annually, with budgets of less than a hundred million dollars per film, according to sources familiar with the company’s plans.

This means that Apple will not change its policy of spending a billion dollars annually on films, but the nature of these films and their release strategies will change, according to the sources. While the company will continue to seek to release one or two films annually with large budgets in cinemas, films like “Wolfs”, for which Clooney and Pitt were paid tens of millions of dollars, will be marketed as streaming-exclusive films rather than being released in cinemas.

An Apple spokesperson declined to comment on its film plans.

Apple’s withdrawal from cinemas coincides with Netflix and Amazon reevaluating their film strategies, with Netflix appointing producer Dan Lin to oversee its film studio, which had been spending billions of dollars annually and producing more films than any other Hollywood studio. However, Netflix struggled to manage the quality and costs of these films, which in some years approached fifty films.

Amazon, on the other hand, has appointed former Warner Bros. executive Courtney Valenti to lead its film division, aiming to produce twenty-five films annually, with fifteen to be shown in cinemas and ten on the Prime Video streaming service. However, Amazon has not yet been able to produce a similar number of successful films.

As Hollywood agents and producers struggle to understand the strategies of technology companies, some wonder about the purpose of showing films in cinemas, whether it is for profit or as a promotional tool before streaming releases. It is clear that these companies need to increase their spending on promoting these films.

Apple’s film studio is led by Matt Dentler, who was a programming director at the “South by Southwest” film festival and is now under the leadership of Van Amburg and Erlicht, who have experience in television. It is evident that this television background impacts production strategies in Hollywood.

Decisions by Netflix and Apple are putting pressure on cinema operators, who were hoping for support from technology companies for struggling theaters, while the film industry struggles to recover from the effects of the coronavirus pandemic and labor strikes.

The billion-dollar successes of films like “Inside Out 2” and “Deadpool & Wolverine” show that the cinematic model is still viable, but ticket sales and the number of films released remain lower than pre-pandemic levels.

Apple’s film strategies remain mysterious, with many expecting them to rely on the performance of the film “F1”, in which the company is collaborating with Warner Bros. for distribution. Reports indicate that its budget exceeds three hundred million dollars, making it Apple’s most costly film production to date.

Ultimately, the decision to step away from cinemas may have significant effects on traditional studios, including Sony Pictures Entertainment, which had taken on distributing some Apple films. Despite the massive expenditures by technology companies in establishing studios in Hollywood, these companies still seek to better understand the complexities of the film industry.