Apple’s Big Content Plans Just Got Bigger — It Wants to Make Feature Films

June 15, 2018, 11:25 AM UTC

Apple has decided on its next Hollywood act: making feature films.

A deal is near for the rights to an animated movie as part of its upcoming slate of original video offerings, according to people familiar with the matter. Apple (AAPL) is in talks with Cartoon Saloon, an Ireland-based, Oscar-nominated animation studio, said the people, who asked not to be identified speaking about private negotiations.

The movie has yet to be made and is more than a year from release, but Apple has been in talks to buy distribution rights for the U.S. and some other countries, the people said. It’s unclear how Apple plans to make the movie available, but a theatrical release, necessary to qualify for Academy Awards, is possible, one of the people said. Other potential movies are also in the works, the person noted. Apple and Cartoon Saloon had no immediate comment on Thursday.

The deal hasn’t closed and could still fall apart, but the talks mark a new level of ambition for Apple’s plan to take on Netflix (NFLX), Google (GOOGL) and Amazon (AMZN) in the booming online video market. Apple has struck several deals for original TV shows and documentaries, including one about singer Ed Sheeran. But the company hasn’t announced any movies so far.

The iPhone maker has been one of the biggest sellers of other companies’ shows and movies through its iTunes store, so it has existing ties to the entertainment business, mostly through executive Eddy Cue. Its online video push has expanded into funding original content as the Cupertino, Calif.-based company tries to double services revenue.

The company began by funding new shows, like Carpool Karaoke, for its Apple Music streaming service. Last year, Apple hired TV industry veterans Jamie Erlicht and Zack Van Amburg to build an in-house studio. The two executives got a budget of at least $1 billion to spend in a year, people familiar with the plans told Bloomberg previously.

Apple faces stiff competition from Hollywood studios and digital streamers that spend billions of dollars annually on new material. But its large reservoir of cash and the popularity of its devices have ensured the company can get a meeting with anyone in the entertainment business.

The Cartoon Saloon movie deal is part of a more ambitious video production effort. Apple hasn’t said how the new material will be distributed, however it launched a TV app in 2016 that features prominently on iPhones, iPads and the Apple TV streaming box. The company hopes to release its first slate of original programming in 2019, Bloomberg reported in October. It’s aiming for broad appeal, and an animated movie would fit that mold.

Apple has a history in animation, with founder Steve Jobs helping revolutionize the genre. About a year after Jobs resigned from Apple in 1985, he bought the computer division of Lucasfilm from Star Wars creator George Lucas, and established the group as an independent company called Pixar. Jobs led the new studio to the 1995 release of the world’s first fully computer animated feature Toy Story, which was a massive hit.

Today, Walt Disney (DIS) owns Pixar, which this weekend is releasing a sequel from one of its many popular franchises, Incredibles 2. Disney CEO Bob Iger sits on Apple’s board, so the tech company will be competing with a close partner.

Cartoon Saloon is based in Kilkenny, Ireland, and has three Academy Award-nominated animations: Secret of Kells, The Breadwinner and Song of the Sea, a 2014 film based on Irish folklore. Its work is widely seen around the world. The studio makes short movies as well as feature films and TV shows. The Emmy-nominated preschool series, Puffin Rock, streamed globally on Netflix in more than 25 languages. On Tencent Holdings’s streaming service, it is close to 100 million views in China, according to its website.

Cartoon Saloon co-founder Tomm Moore, the director of two of the three academy nominated animations, is due to start production later this year on his third feature, Wolfwalkers, the company said on its website.