Five Reasons to Be Optimistic About the Entertainment Business

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Five Reasons to Be Optimistic About the Entertainment Business

By Lucas Shaw | Bloomberg Businessweek | September 23, 2024

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Late last year, Bryan Lourd, the chief executive officer of Hollywood’s largest talent agency, was surveying the damage. The entertainment industry, his home of roughly four decades, seemed to be shrinking. The movie business was struggling to recover from the pandemic and multiple labor stoppages. Cable TV was speedily collapsing. Execs at Disney, Fox, Paramount and Warner Bros. had sought out mergers, cut staff and funneled billions of dollars into new streaming services—Max this, Plus that—that were losing money. Wall Street, which had encouraged the spending, was losing hope; Lourd, who represents movie stars such as Brad Pitt, George Clooney and Scarlett Johansson, was dismayed.

When times are lean, Hollywood tends to keep faith that it’s one hit away from a turnaround. But many executives and filmmakers have begun to wonder if their industry is entering permanent decline. And many others turned to other professions permanently or partially – only the time will tell.

It’s not just Hollywood, either. Macroeconomic factors related to the pandemic—inflation leading to higher borrowing costs, low unemployment leading to a talent scarcity, stagnating sales—have caused disturbances elsewhere. The video game industry has fired nearly 12,000 people this year. Podcasting has suffered through years of spending cuts after not growing as fast as the tech giants anticipated. Attendance at theme parks and concerts has plateaued in the aggregate, despite some notable exceptions. 

And yet the doom and gloom can’t obscure that people have never spent more time or money on entertainment. While they’ve moved on from specific formats, they’ve never lost interest in pop culture.  Worldwide, the amount of time people spend staring at screens is at an all-time high, as are revenues for almost every sector of the entertainment business.

“What remains an absolute truth is that when people are served what they want, the business is profound. They haven’t lost interest and will pay a premium for great entertainment. The consumer is there for great content. 

The media industry has already solved the biggest hurdle in any business: getting customers to want its product. The challenge is how to deliver it. The internet has made it easier for anyone to produce and distribute their work; YouTube ingests hundreds of hours of video every minute, while Spotify Technology SA adds thousands of songs a day. Some companies, such as Netflix, have figured it out. Others, like Disney and Comcast Corp., are still noodling. Still more will fail because they can’t adapt. 

Despite its challenges, Hollywood is not in its final act. Here are their five main reasons: streaming is a great business … once you stop hemorrhaging cash; people don’t mind sitting through ads to save some money; a new creative class is thriving; Hollywood and Silicon Valley have maybe, finally, figured out how to work together; and If the music industry can make money, so can anyone.

3 key takeaways from the article

1. The entertainment industry seemed to be shrinking. The movie business was struggling to recover from the pandemic and multiple labor stoppages. Cable TV was speedily collapsing. Execs at Disney, Fox, Paramount and Warner Bros. had sought out mergers, cut staff and funneled billions of dollars into new streaming services—Max this, Plus that—that were losing money. Wall Street, which had encouraged the spending, was losing hope.
2. And yet the doom and gloom can’t obscure that people have never spent more time or money on entertainment. Worldwide, the amount of time people spend staring at screens is at an all-time high, as are revenues for almost every sector of the entertainment business.
3. five main reasons why, despite its challenges, Hollywood is not in its final act: streaming is a great business … once you stop hemorrhaging cash; people don’t mind sitting through ads to save some money; a new creative class is thriving; Hollywood and Silicon Valley have maybe, finally, figured out how to work together; and If the music industry can make money, so can anyone.

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Topics:  Entertainment Industry, Streaming, Technology, Theme Parks