Apple’s Biggest Movie Launch Cost Skydance $177 Million

It takes much more than the wave of a magic wand to make a movie which soars to the top of a streaming platform’s charts. Pulling it off in the face of lukewarm reviews is even tougher. Doing all that for a net cost of just $176.6 million sounds like the stuff of fantasy. Not for Skydance.

The multimedia conglomerate founded by billionaire Oracle scion David Ellison hit the headlines earlier this year thanks to its $8 billion merger with movie studio Paramount. However, it has been a force in Hollywood since it was launched in 2006. An accomplished pilot, Ellison named Skydance after aerial acrobatics. Fittingly, its first film was war drama Flyboys starring James Franco, Jean Reno and Ellison himself.

In the fall of 2009, Skydance signed a five-year co-financing, production and distribution agreement with Paramount yielding pictures such as Mission: Impossible – Ghost Protocol and Jack Reacher. That deal was subsequently renewed and joined by a non-exclusive multi-year first-look contract with Apple Original Films in 2022.

Variety claimed that Apple guaranteed Skydance a payout of up to $25 million per picture, depending on certain budget thresholds which were due to rise “up to roughly $125 million”. One of the latest fruits of this partnerships smashed through that ceiling but it was money well spent.

Called The Gorge, the action horror film was released in February and was directed by Scott Derrickson of Doctor Strange fame. It stars Miles Teller and Anya Taylor-Joy as rival snipers who are ordered to guard a mysterious gorge between two towers. They form a long-distance relationship and eventually dive below to discover the truth about the creatures dwelling there. They have to work together to survive and of course, they end up as a couple before the end of the film.

Unsurprisingly, critics didn’t warm to the movie’s cliched plot and gave it a 62% score on review aggregator Rotten Tomatoes. “Mixing multiple genres, The Gorge makes for a surprisingly endearing romance until its action-thriller obligations steer proceedings back onto a more predictable path,” says the critics consensus.

In contrast, audiences lapped it up. They rated it 75% on Rotten Tomatoes but that was just the start. As Deadline reported, The Gorge became Apple TV+’s biggest launch for a movie ever, surpassing Wolfs starring George Clooney and Brad Pitt.

Although Apple didn’t disclose specific numbers it confirmed that during the weekend that the movie was released it drove double-digit growth globally for its platform and boosted new viewers by more than 80% compared to the same period the previous week. In Apple’s battle with bigger and better established streamers, that kind of increase in business was invaluable. It didn’t come cheap but it was a far cry from the third of a billion Dollar budgets that some studios give to their flagship films. There is no doubt that The Gorge cost much less than that to make.

Although the movie never makes it clear where it is set, it was actually made in the United Kingdom and this shines a spotlight on its costs. Studios filming in the U.K. get a cash tax credit which reimburses up to 25.5% of the money they spend in the country provided that at least 10% of their core costs are incurred there. In order to demonstrate this to the authorities, studios set up separate companies to produce each film in the U.K. and they are obliged to file legally-binding earnings releases.

The Skydance subsidiary behind The Gorge is called Hadrian Productions UK and its latest earnings releases reveal that by August 31, 2024, a total of $213.6 million (£166.2 million) had been spent on the movie which was in line with the budget. This spending covered filming which took place at Warner Bros. Studios, Leavesden just outside London where the tower interiors were built on a sound stage.

In contrast, the gorge exteriors were shot at the Rauma River in Norway though there was no danger of the production falling below the minimum threshold to get the reimbursement. Not only was Leavesden the main production base but British firms Framestore and DNEG handled the visual effects.

The movie cast a powerful spell on the U.K. economy as a total of $12.6 million (£10.1 million) was spent on the staff who peaked at a monthly average of 165 employees.

That doesn’t include freelancers, contractors and temporary workers as they aren’t listed as employees on the books of U.K. companies but often represent the majority of the crew on a film shoot. In return for generating this blockbuster economic impact, Skydance banked a total tax credit of $37 million (£28.9 million) bringing its net spending down to just $176.6 million.

It is believed that the vast majority of the movie’s costs had been incurred by the end of August last year even though there were five months after that until the premiere. Skydance seems to have found the winning formula but if it wants to repeat the trick it will have to establish why viewers tuned in despite the weak reviews. That may be no mean feat.