Apple’s movies are a big hit at the box office. They should keep making them.

Apple, which makes iPhones and computers, also produces movies. Three of her girlfriends have come to the theater in recent months, but… they haven’t done well.

“Napoleon,” “Killers of the Flower Moon” and “Argyle” grossed a combined $466 million in theaters around the world. However, Variety reports that these movies cost Apple at least $700 million to make.

That’s not surprising at all. It was common knowledge before its release that Killers of the Flower Moon, a three-and-a-half hour historical drama, would struggle at the box office. And the fact that Argyle was a big-budget James Bond parody that didn’t appeal to audiences was confirmed when the film was scheduled for release in early February. This is a calendar slot that studios use to release movies they know will fail.

Even more surprising from Variety: Apple officials say both “Killers of the Flower Moon” and “Napoleon” are actually profitable and are “supported by ancillary revenue streams.” ” claims.

How is it?

Napoleon made $221 million in theaters and had an estimated production cost of $200 million. “Killers of the Flower Moon” cost about the same to make, $215 million, and took in less at the box office, $157 million.

Theaters keep about half of their ticket sales, so both films many Yet another place to fill that gap.

There are no “Killers of the Flower Moon” or “Napoleon” action figures or fast food tie-ins. And because Apple-made movies are explicitly built to be shown on the Apple TV+ streaming service, Apple can’t sell them to another streamer for a profit.

This leaves video-on-demand sales, where Apple and other distributors sell or rent movies digitally. But those numbers should only be a fraction of box office revenue.

We reached out to an Apple spokesperson for comment, but we don’t expect a response.

Until then, I can only imagine that somewhere in Apple’s accounting department, someone agreed that a big, flashy movie deserves some critical acclaim. “Napoleon” is expected to win several Oscar awards. “Killers” has won numerous awards, including Best Picture and Best Director, and has created marketing value for Apple in general and his Apple TV+ in particular.

I don’t think that’s GAAP accounting, but whatever. Apple made $97 billion profit last year. If necessary, the film can be canceled and left to marketing in its entirety.

Apple, movies, and TV: Why?

The bigger question, which remains unanswered, is why does Apple make movies and TV shows in the first place?

The first obvious answer is that you need something for the Apple TV+ streaming service. And his second obvious answer is that Apple needs his Apple TV+ because, as iPhone sales slump, Apple is increasingly focused on making money with “services.” Because there is.

But remember: The main driver of the “service” is actually “people paying for in-app purchases for games they download from Apple’s App Store,” and even more so because Google has hired the company as the default search engine on his iPhone. He’s paying $18 billion.

After a rocky start, Apple was able to meaningfully grow Apple TV+. Subscription tracking service Antenna believes that Apple had 18 million US subscribers at the end of January 2024.

This is just a fraction of the 80 million subscribers Netflix has in the US and Canada (worldwide, Netflix has 260 million subscribers). , with significantly lower rates in some international markets). Still, even in the best-case scenario, Apple TV+ would only be a fraction of the $85 billion Apple made from the service last year.

But look, I’m not an Apple shareholder, I’m just a guy who likes watching movies. And I like “Napoleon” and one of my children thought “Argyle” was not bad (I love him, but he is wrong, it’s terrible). Then one day, when I have four hours of free time, I watch Martin Scorsese’s latest movie. Because he’s not going to make many movies anymore.

So keep making this product, Apple! No matter how you define “profit,” there’s some leeway.

Correction: March 7, 2024 — A previous version of this article incorrectly cited subscription tracking service Antenna. We believe that Apple TV+ will have 18 million subscribers in the U.S. as of the end of January 2024, and 25 million worldwide.