With Brutal 2023 in the Books, Will Hollywood Find Its Swagger?
If you’re in the entertainment industry, it’s starting to feel like the end of something.
The end, perhaps, of a predictable business where one cycle might be better than another, but that eventually swings back around to profits and prosperity in a reasonably balanced ecosystem.
Yeah, not so much anymore.
For the veterans who were here during the flush decades of the 1980s and 1990s and even into the early 21st century, that feeling of a descending arc is unavoidable. The swashbuckling producers of the Jon Peters and Peter Guber variety are lore in the mists of time. The rags to riches tales — like David Geffen forging a letter to get a job at the William Morris agency and blazing a trail to billionairedom — seem ancient. Lawyer Bert Fields being driven by a chauffeur in his Bentley to work every day? Who does that?
Those folks had swagger. They worked in Hollywood.
Is the swagger gone? There’s not a soul I know who doesn’t feel beat up and bruised by the vagaries of 2023: the anemic box office, the ongoing losses in streaming, the depressed stock prices for studios across the board and further down on the chain, thousands of job losses. TheWrap has written about these trends exhaustively throughout the year, and it would be nice to say that there’s a bright light over the horizon leading to dawn. There isn’t. There’s really only more uncertainty.
Meanwhile, quarter after financial quarter brings skyhigh profits for the tech giants from Google to Amazon to Meta, seemingly impervious to high interest rates and the flopsweat of working folks whether on Main Street or at Universal CityWalk. Almost two years ago TheWrap wrote a charticle that added up to: $2.7 Trillion Apple Is Now Worth 11 Disneys. Disney has dropped significantly in value since then.
In so many ways it feels like a corner is being turned.
And yet, there were plenty of reasons to call the misery of 2023 an anomaly, most notably the labor strikes that stretched on from May 2 through Nov. 8. It was a brutal experience to watch the entire system that sustains this community suffer. We saw economic hardship — supposedly for the longer term good of the whole – that impacted every aspect of production and distribution of movies and television. In the end, both the writers and the actors got historic deals — significant raises, increased streaming residuals and guarantees for the rights to their digital images.
Still, it will take time to assess whether this labor outcome becomes a re-set of the profit centers in the entertainment ecosystem, or another step on the downward slide away from economic health. It remains to be seen if the decision by guild leadership to hold out for the deals they got will end up being a win, or simply reducing the overall quantity of production because everything just got more expensive.
What seems clear is that the studios were not bluffing in their concerns over the stresses of rising costs and lower margins (although no one can argue that the moguls themselves aren’t still insanely overpaid). Right now, the 2024 box office is set to produce lower revenue overall than in 2023, because of the lack of movies in the pipeline. Lackluster financial results and persistently low stock prices in 2023 have led the major studios to cut back significantly on their production spending. They’ve raised prices, layered in advertising. And they’re hoping that will be enough.
It might not be. Peak TV is over. Most of the studios have started licensing their content to Netflix in a tacit acknowledgement that that upstart has won the streaming wars. And consolidation continues, with the major studios dwindling in number. Not only is Warner Bros now Warner Bros Discovery, but it may soon include Paramount and CBS. And Showtime. Five years ago each of these were vibrant brands of their own. MGM is now squarely settled at Amazon. Rupert Murdoch’s Fox entertainment is now deep in the belly of Disney. We’re all waiting for the next company to get swallowed, probably by a tech giant.
But the big risk factor that may prove irreversible in its impact is, without a doubt, artificial intelligence. (Read our excellent 2023 series here.) The terrifying specter of creative work being reduced to a small core of do-it-yourselfers, of background actors dwindling to a handful per production, to animation work being replicated at warp speed — these loom as imminent realities, not as distant possibilities.
The next 12 months, bringing with them the aftershocks of 2023, will be as important in setting the path to the future of Hollywood as the last 12 consequential ones.
We will want to watch closely to what will happen at Disney, a subject of huge speculation. So many see Disney as a bellwether company for the health of the whole industry. And right now, it is struggling. What we know for certain is that CEO Bob Iger isn’t staying past 2026, and that the Marvel franchise — previously the gold standard for driving Disney’s content flywheel — is in desperate need of a creative reboot.
As for the other studios, we will watch the post-strike recovery with bated breath. The teetering number of major studios that operate independently suggests an overall remaking of the landscape.
Netflix, profitable and confident, seems to be on the safest ground. But in the world of entertainment in 2024, no one should feel safe.
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