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Hollywood faces the great contraction as economic realities bite
As Hollywood celebrities graced the red carpet in early January, a pressing concern loomed over the glitz and glamour: Hollywood is undergoing a significant contraction.
Seventeen industry insiders, including entertainment executives, agents, and bankers, have shared their perspectives with Reuters, collectively painting a picture of a shifting landscape in the television and film industries.
From a reduced number of original series and movies to increased scrutiny of budgets and mounting pressure on cinema profits, decision-makers acknowledge that the entertainment sector is adapting to challenging economic conditions.
Notable reduction
“The great contraction is upon us,” commented one anonymous veteran television executive. “I anticipate a notable reduction in both the quantity of content and the expenditure on content.”
The ongoing contraction will be a focal point as companies like Walt Disney (DIS.N), Warner Bros Discovery (WBD.O), and Fox release their quarterly results this month.
It also sets the stage for discussions regarding potential media mergers, including recent talks of a sale between the owner of Paramount Global (PARA.O) and Skydance Media CEO David Ellison, whose studio co-produced “Top Gun: Maverick.”
Analyst TD Cowen predicted a 7% decline in broadcast and cable television advertising by the end of 2023 compared to the previous year, with Disney experiencing an 11.7% drop in total advertising, as per LSEG.
Warner Bros Discovery reported a 13% reduction in advertising during the first nine months of 2023.
Digital advertising
Traditional TV, alongside print and radio, has faced challenges due to the rise of digital advertising.
The outlook for 2024 remains unfavorable, with TD Cowen projecting another 7% decline in broadcast and cable TV ad revenue. Despite media companies expanding their digital advertising ventures, traditional TV advertising still constitutes 80% of their total advertising revenue.
Streaming services, once hailed as the future of the industry, are grappling with profitability concerns after years of extravagant spending.
As the industry enters the “third act of the streaming wars,” production spending is expected to dip below 2022 levels, signaling a shift from the previously “unsustainable” investment, according to MoffettNathanson.
Subscription fees
Most streaming platforms have increased subscription fees while offering fewer new content, raising doubts about their long-term strategies, as noted by TD Cowen.
The number of scripted series is expected to witness a significant reduction from the peak of 633 shows in 2022.
A combination of Hollywood strikes and budget constraints led to a decrease in production, resulting in only 481 U.S. series released in 2023, as reported by market research firm Ampere Analysis.
Even industry leader Netflix (NFLX.O) reduced its scripted series output by more than one-third from 2022 to 2023, according to Ampere.
News
How Gen Alpha are positioned to shape the future of education
Future of education: how Generation Alpha and engaged parents are shaping schools amid challenges and rapid change
Future of education: how Generation Alpha and engaged parents are shaping schools amid challenges and rapid change
– Future education involves increased parental engagement and adapting to technological changes for younger generations.
– Barriers to involvement include time constraints and poor communication from schools, impacting family-school relationships.
News
Trump orders Pentagon to resume nuclear testing immediately
Trump orders Pentagon to resume nuclear testing, raising concerns over arms race and global safety
Trump orders Pentagon to resume nuclear testing, raising concerns over arms race and global safety
– Trump ordered the Pentagon to resume nuclear testing, risking global tensions and retaliation from other nations.
– Proliferation concerns are rising as nuclear states modernise arsenals and the New START Treaty nears expiration.
The potential for worldwide radioactive fallout remains high, even for underground tests. The Comprehensive Nuclear Test Ban Treaty, signed by 187 states, prohibits such testing, yet the US remains a signatory without ratification, bound not to violate the treaty’s intent.
Nuclear weapon testing, once crucial for understanding weapon effects and military planning, has diminished. Since World War II, nuclear tests have largely focused on developing new designs. Significant environmental and health concerns led to a moratorium on atmospheric testing in the early 1960s and the Partial Test Ban Treaty in 1963.
Many countries, including the US, stopped explosive testing in the 1990s. Technological advancements allowed nations to develop nuclear weapons without the need for actual explosions.
Proliferation Risks
Nuclear proliferation continues, with all nine nuclear-armed states investing heavily in modernising their arsenals. This raises concerns about lowered thresholds for using such weapons.
Recent conflicts involving nuclear threats have escalated, and the number of nuclear weapons operationally available has begun to rise again. Russia has tested advanced nuclear weapons, while China is rapidly expanding its military capabilities.
The New START Treaty, which confines the nuclear capabilities of the US and Russia, is set to expire soon, with no successor treaty negotiations underway.
The Doomsday Clock has moved closer to midnight this year, highlighting the heightened dangers facing the world today.
News
US–China trade talks are a handshake, not a deal
Trump and Xi unofficially extend tariff truce, with US concessions and Chinese commitments on soybeans, fentanyl, and rare earths.
Trump and Xi unofficially extend tariff truce, with US concessions and Chinese commitments on soybeans, fentanyl, and rare earths.
Presidents Trump and Xi extend their tariff truce in an informal meeting, with US cuts and Chinese promises on soybeans, fentanyl, and rare earths.
Steve Gopalan from SkandaFX cautions this is unofficial and deeper issues between the two super powers remain.
#USChina #TradeTruce #Tariffs #GlobalMarkets #Soybeans #RareEarths #UnofficialDeal #TickerNews
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