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What Apple’s Record Sundance Purchase of 'CODA' Says About the Streaming Wars

Apple Sundance acquisition 'CODA'
(Image credit: Apple)

Apple wowed a subdued Sundance acquisition market over the weekend, dropping a record $25 million to purchase feel-good family drama CODA. Along the way, the owner of the deepest pockets in tech again demonstrated it is increasingly willing to spend what it takes to make a dent in the intensely competitive streaming market. 

CODA premiered on the film festival’s opening night Thursday, the only feature alongside two documentaries accorded the indie showcase’s biggest spotlight.  The film definitely deserved the limelight, as one of this year’s most accessible and accomplished entries. 

Directed by Sian Heder and based on a French film called La Famille Belier, CODA stars Emilia Jones as Ruby, the only hearing-abled member of her tight-knit family of fishers in Gloucester, Mass. Among the fine cast of deaf actors is Oscar winner Marlee Matlin, who plays Ruby’s mother. Ruby is a high school senior, pinched between her family’s needs in navigating the fishing business, pursuing a new interest in music school to develop her fine singing voice, and perhaps a touch of romance. 

This year’s virtualized festival has none of its traditional in-person buzz builders, but social-media response after the premiere was immediate, loud and approving. And it wasn’t just the Twitterati applauding. Variety chief film critic Owen Glieberman, in his rhapsodic review, called CODA a “tender, lively, funny and beautifully stirring drama.” 

The film is, as Glieberman noted, a well-crafted crowd pleaser, with story arcs of a young woman overcoming adversity to realize her dream, and a loving family working together and learning to let that young woman grow and go while taking more control over their own lives. There’s even a community organizer component, as Ruby’s family leads an effort to create a cooperative with other struggling fishers. 

“In many ways, it’s a highly conventional film, with tailored story arcs that crest and resolve just so, and emotional peaks and valleys that touch big fat rounded chords of inspiration,” Glieberman wrote. 

You’d be right to think that sounds like a film custom-crafted for the sensibility that Apple executives from Tim Cook on down have tried to inculcate on Apple TV Plus, as well as across much of their public messaging that isn’t just a product pitch. 

Cook’s directives for uplifting messages and no-go areas have caused some conflicts with creators, but it also has built the outlines of a programming sensibility for TV+, important for differentiating in a time when only Disney+ can be said to have coherent brand among the big streamers. 

Regardless, the film’s charms, and online/critical response to it, were enough to set off a bidding war among several potential acquirers before Apple emerged victorious over the weekend. The $25 million price was nearly 50% higher than the previous record, set in 2020 when Hulu paid $17.5 million (plus 69 more cents to edge out the previous record) for Pete Davidson’s comedy Palm Springs

CODA is a very different film from Palm Springs, the latter an adult comedic cross of Groundhog Day and The Hangover that debuted on Hulu last summer.

No doubt, CODA has its adult-skewing moments, mostly with more blunt, foul and funny language (often in quite evocative sign language) than any Disney film ever. These are people working in the hard-scrabble business of fishing. How Apple TV Plus navigates that when the film comes to the service will be interesting to watch. 

But the bigger question will be what this latest cash splash communicates to Apple’s competitors. Is Apple staking out thematic territory that it plans to own, whatever the price? Will other companies have to begin imposing their own explicit sensibility on their offerings, to differentiate and appeal to market segments? Do they need to further increase programming spends to keep up, or should they try to spend smarter with more targeted deals? 

Though Apple TV Plus was the first of the new group of subscription streaming services to launch, 15 months ago today, Apple has remained a lesser player, so much so that it just further extended free subscription credits to current users through June. That says it understands how much value Apple TV Plus is currently providing to viewers. 

And Apple had little to say about TV Plus during last week’s analyst call around its humongous first quarter earnings, which topped $111 billion. The company set records in about 15 different categories, including for its Services segment, which includes Apple TV Plus and other subscriptions, such as Apple Music, iCloud and Apple Care. 

Services revenue for the quarter reached nearly $16 billion, which, it must be emphasized, represents on an annualized basis more revenue than the combined entire market capitalizations of ViacomCBS, Fox, and AMC (though significant parts of VIAC and Fox are owned by their respective controlling families). 

For those already dismayed by Apple’s deep pockets, the company signaled today it’s going to stuff them even more for the short term, filing a preliminary prospectus with the SEC to issue bonds in a six-tranche deal. 

The size of the issue wasn’t specified, but dollar-denominated bonds would be offered in expiration dates between five and 40 years. Apple shares are up 73% in the past year, valuing the company at $2.26 trillion.

Also tucked into Apple’s continually astonishing earnings, in what was probably the greatest quarter in the history of capitalism: it still has $196 billion in cash and marketable securities. 

For years, the company has said it would spend down that gigantic treasure chest, a commitment CFO Luca Maestri reiterated last week, mentioning $30 billion in recent share buybacks. But, in truth, the company keeps making so much money that vast wallet is pretty much unchanged in girth. 

Perhaps the increasingly public conversations about a possible Apple Car, or Apple VR and AR headsets, will provide an opportunity for Apple to spend down its cash. In the meantime, Apple once again is demonstrating a willingness to spend more than anyone in streaming for properties that fit its vision, and the new Apple One services bundles. 

Last summer, just before the Cannes Film Festival, Apple swooped in with a record $120 million deal for Civil War-era “slave thriller” Emancipation, starring Will Smith and directed by veteran action director Antoine Fuqua. 

And then there was the $70 million pickup from Sony of Tom Hanks’ WWII naval thriller Greyhound. Though Apple didn’t release viewership numbers, third-party reports suggest Greyhound’s debut on July 4 weekend helped drive substantially higher Apple TV Plus signups.

CODA likely won’t do that, given that Emilia Jones, for all her supremely evident talents, isn’t Tom Hanks, and neither is Marlee Matlin, despite that Oscar on her shelf. But it’s not hard to see the film become a breakout hit with young audiences who may celebrate its themes and stars online.  

The size of the deal suggests that Apple is paying attention to TV Plus, even if the company speaks little about it to investors. So too does Apple’s increasingly frequent advertising about Apple TV Plus programming. 

The big question remains whether Apple will really open the wallet? 

To fully match up against its direct competitors, it still needs library of older films and TV shows. Investors at MGM, Lionsgate, AMC, and maybe even ViacomCBS and Sony, are sure hoping Apple is feeling even more acquisitive. 

That may not happen. Apple is playing a different game than HBO Max, Peacock, AMC Plus, Netflix, or Hulu. 

They’re all trying to attract and keep subscribers to their service. Apple is using TV+ to keep happy the owners of its 1.6 billion connected devices. Will its hardware-selling and entertainment-buying prerogatives swamp the Hollywood studios and their newly launched services?