Goodbye to Hollywood

When I was much younger, I wanted to move to Hollywood and make movies. I started gaining a reputation for analysis of trends and market dynamics. I got the chance to dip my toes into what I had thought of as perfect calm waters by being shipped into Los Angeles by a group of venture capitalists. I was beside myself, this was my dream come true. After I arrived, I realized that Hollywood didn’t really exist, it was the name of the Los Angeles based motion picture business. Studios were in Santa Monica, Universal City, Los Angeles proper. Hollywood was a persona put forward by the movie studio, but it never really existed. The area that is Hollywood is a tad rundown, grimy and not at all glamourous. I was so disappointed.

The business that we know as the movies is experiencing a rather profound decline in revenue, output, and a bit of a crisis of self-concept in regard to defining itself. Frankly most of this is self-inflicted, brought on by years of bad decisions which is attributed to past poor decisions by ego driven executives and a much more diverse entertainment economy. The risk because of the shift in the market has caused a high degree of risk and an increasingly rigid attitude in regard to market risk. From 1995 to 2009, all the major studios combined released a total of 112 movies into the theaters. From 2009 to 2024 this number shrank to a yearly average of 83. Consumption for 20th Century Fox by Disney applied changes which further accelerated this decline. The Big Six were now the Big Five. Over the past decade the US box office decreased 38 percent. The ticket prices rose by 33 percent. Let’s use this as an allegory of where this business is climbing out of.  The Super Mario Bros. Movie earned more in April 2023, $490 million than all movies combined in the same month in April of 2024, $437 million. At one time in the world of media, movies grabbed the lion's share of the revenue, now movies just represent 8% of all revenues. The grasp of the pandemic coupled with poor times and labor unrest, delivered almost fatal body blows to the movies There was the pandemic, Hollywood strikes, and labor unrest within IATSE on the industry's financial health. The studio executives lean into known quantities fully realizing the precarious situation the studios find themselves in.

The business of motion picture exhibition is facing strain from the lack of product and as well just too many theater screens. Right now, there are 40,000 screens with an average occupancy rate of 13%. AMC has taken to social media to juice its stock, Regal Cineworld is coming out of a brutal bankruptcy. Streaming services have not picked up the slack when it comes to watching movies.  According to Parrot analytics globally, most of the offering, approximately 77 percent are made up of movies. Movies are still very popular but are they worth getting off the couch for?  Our good friends at Netflix premiere again on average about 220 feature length movies every year, but the demand is four times that number. Remember the studios only put into play 83 movies a year in the theaters. But it is likely the number of major movie studios will be reduced to 4 by the end of the year, and both Paramount and Warners seem to be headed for a re-invention. Netflix at one time produced 80 original movies per year, and have indicated that number going forward is closer to 20-30. The business of motion picture production is down 32% in Los Angeles. The constantly shifting market and the ability of other jurisdictions to attract production with tax incentives is eroding the production business. The television market, a consistent user of studio services, is declining. The SAG and Writers Guild strike further pushed a knife into the chest of the LA based movie economy.

 Filming in Los Angeles has experienced a slow recovery following a significant decline in production due to historic strikes in Hollywood. While the industry has tried to come back to the decline of linear television has delivered a further blow to the media production ecosystem. Reductions in content spend across major studios, coupled with increasing series cancellations and previously mentioned out of State and out of Country incentives have further hobbled this industry

In short, Hollywood is serving far too many master's and the evolving technology is offering too many focuses. It suffers from a profound form of ADHD and  has entered into a bit of a tailspin. The changing landscape has stretched studio priorities and success now hinges on more than just blockbuster features. In exhibition it has to be noted that the Hollywood we as an industry once relied on is fading away. Continued dependence on  that once proud institution is just folly. Theaters will always exist in one form or another, but it is firmly time for a new and perhaps more vital alliance.

Hollywood is on the decline, but movies are not.