How Apple TV+ beat Netflix with the Best Picture Oscar for ‘CODA’

Just three years ago, Hollywood viewed Apple with great skepticism.

Prior to the launch of its Apple TV+ streaming service in late 2019, the iPhone maker had confounded traditional players in the film and television industry with a presentation heavily weighted with star power – Oprah Winfrey, Steven Spielberg plus a musical performance by Sara Bareilles – and little about the actual program.

For some filmmakers and agents, the tech giant’s seemingly cautious approach to content in Cupertino, California, revealed a cultural clash between entertainment and Silicon Valley — one that seemed to affect the company’s ability to work closely with Netflix and Walt Disney Co. to compete. is Disney+. With a Best Picture Oscar in hand for Sian Heder’s family drama CODA, Apple can wave gold-plated hardware to its critics. The Academy of Motion Picture Arts and Sciences honored Apple with its highest achievement, making it the first streaming company to achieve Best Picture.

Apple beat Netflix by a mile.

The producers and cast of the Apple TV+ feature “CODA” after winning the Oscar for Best Picture at the 94th Academy Awards at the Dolby Theater in Ovation Hollywood on March 27, 2022.

(Robert Gauthier/Los Angeles Times)

Netflix has spent tens of millions of dollars campaigning for Oscars over the past few years, winning major awards including Alfonso Cuaron’s directing Roma, and garnering seven Best Picture nominations without snagging the coveted top statuette. Apple nailed it with its first Best Picture nominee, a small, quiet indie film, which it picked up for a record-breaking $25 million at the 2021 Sundance Film Festival.

Apple Chief Executive Tim Cook congratulated the filmmakers and cast, tweeting, “Team CODA has created a deeply beautiful film, a story of hope and heart that celebrates our differences.”

Daniel Ives, managing director at Wedbush Securities, called winning Best Picture a “game changer” for Apple TV+ and said the win will help encourage more talent to work with the streamer as it takes on its rivals. Still, Netflix, Amazon Prime, and Disney+ are well ahead of Apple in terms of subscribers, which is the metric that really matters.

“They’ve been waiting for the validation of the platform and eventually the awards,” Ives said. “It’s a huge endorsement, not just from a talent perspective, but more importantly when it comes to consumers.”

The Apple TV+ subscriber base remains small — with an estimated 25 million paying customers — considering there are 975 million active iPhones on the market, Ives said. Apple doesn’t release subscriber numbers for its video streaming business, which charges a modest $5 a month. For comparison: Around 222 million people worldwide subscribe to Netflix. Netflix’s standard plan costs $15.50.

Both Netflix and Amazon have expanded their movie strategies in recent years to focus on releasing more popular movies rather than just chasing critical acclaim. Netflix has released several blockbuster-like movies with stellar casts, like Red Notice and The Adam Project.

The Apple streamer, which aims to boost the company’s subscription revenue as part of its larger services business, opened in 2019 with just nine programs. The shows received mixed reviews, although The Morning Show and Dickinson found early followings.

Since then, Apple’s TV lineup has expanded and garnered accolades, most notably hit comedy Ted Lasso, which earned an impressive seven Emmys last year. The new psychological thriller series Severance, directed by Ben Stiller, has received widespread critical acclaim and signals Apple’s ambitions in this area.

Its original film unit was slower to gain traction. Movies like Sofia Coppola’s On the Rocks, Tom Holland’s crime drama Cherry, and Tom Hanks’ sci-fi film Finch have been released, but nothing has made a splash in mainstream culture.

CODA’s victory marks a breakthrough. The film is about a deaf family who relies on their only hearing member, Ruby, to interpret for them and help them navigate the fishing community in Gloucester, Mass. But Ruby has ambitions of pursuing a music career of her own.

“CODA” won all three awards for which it was nominated, with Troy Kotsur winning for Supporting Actor and Heder winning for Adapted Screenplay. Kotsur is the first deaf man to win an acting Oscar. Apple was also nominated in three categories for Joel Coen’s The Tragedy of Macbeth, starring Denzel Washington, who was considered to be the lead.

Among the nominees for best picture, CODA” saw the largest percentage increase in viewership following the nomination, according to data from Samba TV, which measures streaming viewing. Almost 40% of CODA’s lifetime streaming viewership came after the nominations were announced. The average for the others — except for “Nightmare Alley,” which released to stream in February — was 15%, the company said.

“In terms of streaming, it’s a newcomer to the block. Many within the Hollywood elite always viewed Apple as something of an underdog and never really took its content efforts seriously,” Ives said. “It would be considered a groundbreaking achievement for Apple, although I think many in Hollywood never thought Apple would come close to winning an Oscar.”

Apple makes most of its sales from the iPhone. Apple TV+ is part of a growing revenue category for Apple-named services that also includes other subscriptions like access to news and music streaming.

The services division, part of a strategy to lock Apple users into the company’s products, generated revenue of $19.5 billion, or 16% of the company’s revenue, in the first quarter of fiscal 2022.

Ives estimates Apple spends about $7 billion a year streaming video content, which is far less than the estimated $19 billion Netflix will spend on programming this year. Apple prepares some big panning moves and agrees to fund Martin Scorsese’s adaptation of Killers of the Flower Moon, a vehicle for Leonardo DiCaprio that’s reportedly budgeted at around $200 million.

Compared to the Scorsese drama, “CODA” was a steal. The film reportedly cost less than $10 million to produce, and the industry estimates that Apple’s awards campaign cost more than $10 million. That’s nothing for Apple, which has over $200 billion in cash.

Apple TV+ still has a much smaller library than Netflix and Amazon, which recently completed an $8.45 billion acquisition of Beverly Hills studio MGM and its 4,000-movie catalog. As rivals catch up after significant leaps in lead, Apple must continue to churn out hits to compete effectively. Some analysts think Apple should step up by buying a production company or studio, but the company has shown little interest in doing so.

“Apple has the least amount of content, and they need to ramp up,” said Tom Nunan, a former studio and network executive who produced the Oscar-winning 2006 Crash.

Apple released “CODA” in August with relatively little fanfare in limited theaters and on Apple TV+. After the Oscar nominations were announced, the company brought the film to theaters in major US cities and London, allowing viewers to see it for free over the weekend of February 25th.

The company bombarded billboards on social media and in Los Angeles with “for your consideration” ads for “CODA” and promoted the film through device screens displayed in Apple Stores.

But Oscar voters are not voting for the campaigns. They award the films themselves, and this is where Apple had an edge, with the kind of uplifting personal drama the Academy is often fond of acknowledging.

“We’ve seen it coming a long way, with streamers taking over when it comes to character-driven stories, stories that can be told on your home TV screen that don’t need to be seen in a cineplex,” Nunan said. “In general, the Oscars celebrate these types of films—character-driven stories.”

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