When Do H'wood Legacy Business Lines Actually Die?
They're all in decline, yes, but don't call last rites — yet
'Tis the season to be merry. At least, in our personal lives.
But when I read or listen to the year-end summaries for the entertainment industry, merriment is nowhere to be found. If “entertainment” were a patient, based on headlines, the question isn’t if the patient will live, but how soon they’ll die.
When I set out to write my own version of the end-of-year recap/looking-into-2024 article, I expected to find the same doom and gloom. Last year I noted how the forces disrupting entertainment all got worse in 2022. But as I stepped back and looked at the numbers for 2023, I think we may be going too far.
So many headlines imply studios will be bankrupt and theaters will become barren wastelands in the coming 12 months. To be honest the data doesn’t really show that. Don’t get me wrong, entertainment is not a growth industry. The opposite, in fact.
Obviously, entertainment is shifting from well-understood and valued business models to the unknown. In 2019, it was easy to find analysts predicting streaming would be more lucrative than the old linear TV model; by 2023 we know that was a fallacy. (I tried to push back on this nearly as soon as I started writing publicly in 2018.)
The issue now is how to accurately predict the pace of change, a “how long do you have to live” prognosis. Decline does not mean dead. To make decisions requires a clear understanding of the actual trend lines in the monetization of filmed entertainment. Today, I’ll look at the old business models, how fast they are disappearing, and how that decline compares with the growth in revenue that will replace it. This matters because of one glaring outcome: the cost-cutting that will result from the revenue decline as we move from old businesses into new ones. And if we thought 2023 was a brutal year for cuts, I hate to say, it seems that was only a start.
In this article, I will…
Show the state of decline in cord-cutting, linear TV advertising, merchandise, home entertainment and theatrical.
Identify what the replacement business models are and how those are growing (or not).
What the lack of growth means for stock prices and, unfortunately, continued aggressive cost-cutting.
The likely impact on jobs and scripted content.