Apple's F1 Movie Burns $300 Million—Still Waiting On A Profit

Apple, Inc. (NASDAQ:AAPL) is making a return to high-budget theatrical releases with the opening of its racing drama "F1" on Friday. 

The film's reported $300 million budget highlights both the company's determination to make a mark in Hollywood and the persistent financial challenges it faces in this arena. 

What To Know: Despite Apple's massive resources—a $3 trillion market cap and annual profits nearing $100 billion—its video production unit, which includes Apple Original Films and Apple TV+, has never turned a profit since its launch in 2017. 

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Apple's foray into theatrical releases and original content began with significant fanfare, aiming to position itself as a talent-friendly destination akin to HBO. The company has invested over $20 billion in original TV shows and movies over the years. 

However, these big bets have not translated into commercial success at the box office or in subscriber growth sufficient to offset costs. 

For instance, the company's last three blockbuster films—"Killers of the Flower Moon," "Napoleon" and "Argylle"—cost more than $700 million to produce and market but only grossed $466 million worldwide, resulting in a loss of over $200 million from theatrical runs alone.

Apple TV+ has also struggled to gain significant market share. Despite having about 45 million subscribers, it accounts for less than 1% of total U.S. streaming viewership and continues to lose more than $1 billion annually, according to Variety.  

While Apple has reduced its annual content spend from $5 billion to $4.5 billion in response to these losses, its video production division remains in the red. 

Ultimately, Apple's video production unit serves as a prestige driver and a means to promote its broader ecosystem, rather than a standalone profit center. 

However, CEO Tim Cook views Apple Original Films as a stand-alone business and recently told Variety that he does not anticipate higher iPhone sales due to the release of "F1." 

While "F1" and other high-profile releases may boost Apple's brand and attract new customers, the division has yet to demonstrate that it can be self-sustaining financially. 

For now, Apple's Hollywood ambitions continue to be underwritten by the success of its other business segments.

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