If you know people in the television, streaming or movie industry, or if you follow any of them on social media, you've no doubt heard a lot of feedback on a piece that was published in the NY Times on Sunday. And just to be clear, most of the feedback you've heard is mostly wrong.
The story is headlined "Apple Rethinks Its Movie Strategy After a String Of Misses," and while the piece's overall framing is about the struggles Apple TV+ has had with its move towards giving its streaming originals a full theatrical release, it focuses specifically on the upcoming release of Wolfs, starring George Clooney and Brad Pitt:
But this month, just six weeks before the film was set to show up in thousands of theaters around the United States, Apple announced a significant change in plans. “Wolfs” will now be shown on a limited number of movie screens for one week before becoming available on the company’s streaming service on Sept. 27. (Internationally, it won’t appear in theaters at all with the exception of the Venice Film Festival, where it will premiere on Sept. 1.)
And while that news surprised a lot of observers, especially given that both Clooney and director Jon Watts had previously said in interviews that had negotiated aggressively to ensure the film received a full theatrical release.
But what drew the ire of many people in Hollywood was this paragraph in the NY Times piece:
With “Wolfs,” Apple substantially outbid its competitors, according to three people with knowledge of the process, who spoke on the condition of anonymity to discuss financial terms, paying Mr. Clooney and Mr. Pitt more than $35 million each and Mr. Watts (“Spider-Man: Homecoming”) more than $15 million.
Those figures seemed insanely high to many industry critics and there was much speculation about why Apple TV+ would make a deal that would guarantee a massive financial hit.
To be honest, I had the same reaction and decided to see if I could get more clarity on the situation. And I have at least part of the answer about what happened.
According to two sources at the streamer, the money quoted in the NY Times is "not accurate, but in the ballpark of their payout." But both sources also noted that the numbers seem high because they represent a buyout of the two actors and director. In other words, the increased figure is meant to compensate the trio for what they might have made if the film received a full theatrical release.
The way it was explained to me was that Clooney, Pitt and Watts had all agreed to a much smaller salary as long as the film received a full theatrical release. But there was also a schedule for what they would receive if the movie ended up not going to theaters (and a one-week limited release was essentially defined as not a theatrical release). The figure quoted in the NY Times reflected that reality, although either the paper's sources didn't realize that was the case, or someone along the way towards the piece’s publication misunderstood the distinction.
But given what it cost Apple TV+ to skip a full theatrical release, why would they make that decision? The answer to that lies in another paragraph in the NY Times article:
It joined forces with Paramount Pictures to release Martin Scorsese’s “Killers of the Flower Moon,” which cost $200 million to make and grossed $157 million worldwide. Ridley Scott’s “Napoleon” (Sony) cost $200 million and grossed $221 million worldwide. The $200 million spy thriller “Argylle” (Universal) grossed $96 million. And most recently, Apple teamed up with Sony again to release “Fly Me to the Moon,” which cost $100 million but grossed just $40 million worldwide despite the star power of Scarlett Johansson and Channing Tatum.
Apple’s deal with Sony has it splitting marketing and distribution costs. Once those costs are recouped, the studio receives a distribution fee. Theater owners keep roughly 50 percent of the gross.
According to my sources, Apple TV+ movie executives looked at what they believed Wolfs would likely make with a theatrical release, and once everyone else's cut was subtracted, not only was the film going to lose money, but that the streamer would lose less money if they paid off the trio and cut their losses.
One source did walk me through some of the financials off-the-record, so I can't discuss that other than to say the figures that were shared with me made sense. But regardless, it's clear that the streamer's executives believed that was the best move. And they also see the streamer's attempt to launch a regular theatrical release schedule as an expensive miscalculation.
