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Why Apple shouldn’t get into the movie theater business

Scott Saloway

Apple’s (AAPL) recent push into content production is running into issues, with its film “The Banker” pulled ahead of its theatrical debut. The premiere was canceled (stemming from sexual abuse allegations), with Apple having to scrap the movie’s debut at the American Film Institute’s festival in Los Angeles, and a star-studded opening set for Dec. 6.

That’s leading to new questions over Apple’s future as a content company and whether it should control actual theaters to make theatrical releases easier.

Richard Brail, the head of media and entertainment at financial advisory company PJ Solomon, tells Yahoo Finance’s The First Trade that it’s not the best idea for a tech company to start owning physical entertainment spaces. That’s a whole different business, he said. (For now at least, any suggestions that Apple might buy a theater chain is mere speculation.)

“Apple is a technology company that's done an amazing job of facilitating the distribution of content,” Brail said. “They could expand their repertoire through more technology distribution means like a Roku (ROKU); I think for them to own physical venues in the physical space, serving popcorn and food and beverage, that's hospitality.”

“The really good venues, the really good site-based entertainment companies, are really hospitality companies that are providing an entertainment service,” Brail said. “I still think that the Amazons and the Apples and a lot of the other big media companies are distributing content.”

Samuel L. Jackson and Anthony Mackie in “The Banker" (Apple publicity photo)
Samuel L. Jackson and Anthony Mackie in “The Banker" (Apple publicity photo)

Movie theaters require huge investments in real estate, fancy seats and projectors, not to mention staff, to encourage people to give up their couches and the streaming services for a few hours.

“It's human nature to be social and to connect with other people. So as many incredible offerings there are in the home with all these new streaming services, people still want to have a night out,” Brail said.

Theater chains that do it right “invested in luxury leather recliners, expanded food and beverage and as a result, they created a differentiated experience for the consumer,” he said.

That’s partly why Brail says Apple should invest its money in being a tech company that produces content that can be streamed.

“People who love to see movies will see them everywhere,” Brail said.

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