Box office momentum, AI hype and more Hollywood business storylines to watch

Here are some signs that disruption may be coming to an industry near you. Power consolidated and dominated by a few major players. Tepid decision-making and creative stagnation. A restless, frustrated workforce and a confused consumer base.

All of these describe Hollywood in some form or another as the entertainment business tries to shake off the rubble left by the shift to streaming.

Certainly, the people who make movies and television for a living are feeling it. At virtually every social gathering I attended during my time off last week, someone — a writer, a producer or a crew member — would find out what I did for a living and ask some version of, “So when is this business going to get less screwed up?” To which I’d respond, tongue-in-cheek, “You’re asking me?”

The dream may be that the calcification of the film and TV business’ tastes, combined with technology’s democratization of filmmaking and distribution, will lead to a renaissance of ingenuity and shakeups, similar to how the deadening corporatization of the 1980s led to the following decade’s indie film boom.

It’s not there yet. Clearly, there are some steps left to go in legacy media’s shakeout during the months ahead, following an eventful summer. Here are the storylines to watch this fall and beyond.

Box office momentum

Movie ticket sales for the key summer blockbuster season, defined as the first weekend of May through Labor Day, were down 10% from the “Barbenheimer”-fueled bonanza of last year. Normally, that kind of decline wouldn’t be something for film studios to cheer about. But in this case, it is, mostly because it was expected to be so much worse after the struggles of “Furiosa: A Mad Max Saga” and “The Fall Guy.”

Revenues made a substantial comeback, thanks in large part to hits such as “Inside Out 2,” “Deadpool & Wolverine,” “Bad Boys: Ride or Die” and “Twisters.” Sequels and reboots dominated, but smaller films such as “It Ends With Us” and “Longlegs” played a role in the rebound as well.

In all, domestic sales hit nearly $3.7 billion, according to Comscore. Not quite up to the $4-billion levels that would be consistent with a return to pre-pandemic status, but much better than the mere $3 billion that industry prognosticators anticipated a few months ago.

Analysts are looking at the fall and holiday seasons to see whether the momentum continues, now that the lingering effects of the writers’ and actors’ strikes, which delayed multiple big titles, seem to have dissipated. “Beetlejuice Beetlejuice,” “Joker: Folie à Deux” and “Wicked” are expected to do big business. Tech giants that have dabbled in the movie business may be having second thoughts about their approaches to theatrical film. But as we’ll see, the box office is a surprising bright spot for the overall industry.

Signs of the pay-TV apocalypse

Over the weekend, Walt Disney Co. channels including ESPN and ABC went dark for DirecTV customers, just as many were sitting down to watch Sunday’s highly anticipated football game between USC and Louisiana State University. It also cut off ESPN’s coverage of the U.S. Open tennis tournament. The start of the NFL season is just days away. The spat’s timing is terrible for consumers, the result of an impasse that came after the companies haggled for weeks over the carriage fees Disney receives for its programming.

These fights tend to become overheated in public (this latest one is notable for its pronounced name-calling) but ultimately get resolved fairly quickly, with both sides declaring victory at the end.

Nonetheless, as my colleague Meg James has written, this newest dispute comes amid a stressful period for the pay-TV business. Cable and satellite services are losing customers at an accelerating rate that even the veteran analysts at MoffettNathanson described as “mind-boggling.” El Segundo-based DirecTV is especially hard hit by these shifts in consumer behavior.

Content companies such as Disney are transitioning to a streaming-based business model but can’t afford to give up the lucrative fees they get from their TV distributors, a.k.a. cable and satellite operators. Just last year, smaller Disney channels were dropped from Charter’s Spectrum service after a roughly 12-day blackout due to a similar clash.

Look out for more indications of the cable industry’s erosion. Weeks ago, Paramount Global and Warner Bros. Discovery wrote down the value of their TV networks by a combined $15 billion, in part because they’re losing leverage with cable companies due to their decreasing viewership and cultural relevance.

The chaos in the TV and streaming business has inspired some rival media companies to join forces in announcing discounted streaming bundles to prevent churn, but this isn’t really a re-creation of the cable package online. The planned joint streaming venture Venu Sports — an effort by Disney, Fox and Warner Bros. Discovery to recapture cord-cutters — was temporarily blocked by a judge over antitrust concerns brought by digital channel packager Fubo. Another blow for the bundle.

When are jobs coming back?

Recent data from research firm Ampere Analysis suggest that film and TV commissions by streamers, including Netflix and Amazon, are starting to pick up again after a steep downturn. But overall, the number of green lights is nowhere close to what it was in the Peak TV years of 2021 and 2022.

Much of the work that’s getting picked up is being produced either out of state or overseas, which is a challenging reality for anyone who’s put down roots in Los Angeles with the purpose of making a living, let alone supporting a family, in the entertainment industry.

Also, many of the deals getting made today are smaller in value, according to agents who spoke to my colleagues at The Times for the paper’s analysis of the long-deferred comeback. This combination of factors has caused some people to consider different lines of work, turning side gigs into their main hustles.

Meanwhile, it’s no better on the studio side, with Paramount Global targeting 2,000 layoffs before the end of the year to hit massive cost-saving targets, with most of the workforce reductions expected to be completed by the end of this month.

More studio shake-ups

Pending approval from regulators, Paramount Global has essentially closed the books on its soap-operatic merger with David Ellison’s Santa Monica-based studio Skydance Media. The one potentially serious rival suitor, billionaire entertainment executive Edgar Bronfman Jr., bowed out of the proceedings last week.

Bronfman, of Seagram and Warner Music fame, had tried to take advantage of Paramount’s 45-day “go-shop” period, established as a part of the Skydance deal that allowed the struggling, Redstone-controlled media giant to consider superior bids. But Bronfman couldn’t come up with the capital to make a truly compelling play, so Skydance won by default, with the backing of RedBird Capital and Ellison’s Oracle co-founder father, Larry, one of the world’s richest people. After all, the Ellison family had a massive head start and was Shari Redstone’s preferred suitor all along.

Paramount’s Skydance pact doesn’t close until the first half of next year, but that’s not stopping the firm’s current leadership from pursuing an aggressive streamlining strategy, which could include not only layoffs but also the spinning off of cable network assets such as BET and strategic partnerships for streaming service Paramount+. The Skydance team says it has identified $2 billion in cost synergies.

Of course, Skydance and Paramount aren’t the only companies sharpening their knives for slices of the media industry’s shrinking pie. As the cable business continues to deteriorate and the streaming business sorts itself into clear tiers of winners and stragglers, can additional consolidation be far off?

AI boom or bust?

Since OpenAI unveiled its ChatGPT and other artificial intelligence tools, studios and creatives have been feeling out the AI future in the hopes of not being left behind by yet another meaningful technological advancement. Studios are embracing the technology as a way to save money, of course. Legal issues having to do with safety, deep fakes and intellectual property theft are making their ways through the courts and state legislatures. OpenAI bumbled its way into a public-relations fight with Scarlett Johansson.

Workers are seeking to educate themselves on the fast-rising tech as it becomes increasingly mainstream. As The Times’ Christi Carras recently wrote, some are doing so out of genuine interest in how computerized automation can improve their workflow, saving them time and money. Others are doing so out of a survival instinct, fearing that failing to keep up will make them obsolete. They know that the protections offered in recent union contracts can go only so far. And not everyone who’s at risk of displacement is part of a guild.

There are signs that AI’s growth is starting to slow, and the stock market has felt the pain of the deflating excitement surrounding the sector. Science fiction writer Ted Chiang recently wrote an essay for the New Yorker criticizing AI and throwing cold water on the hype over its potential as a creative engine. Some of AI’s promises may end up having been overblown by tech futurists and venture capitalists. However, creatives are wise not to take that prediction for granted.

Stuff we wrote

‘Get to know your enemy.’ How Hollywood workers are learning to use AI. The Times spoke with a cinematographer, an editor, a costume designer and two voice actors about why they are taking steps to educate themselves about AI.

What to know about the Disney, ESPN blackout on DirecTV. The blackout — affecting nearly 11 million homes — comes during a busy sports calendar with college football, the NFL and the U.S. Open tennis tournament.

Child actor protections are ‘hugely flawed,’ allege teachers on film sets. Set teachers who work on film and TV productions say the system intended to protect the health and welfare of minor actors is subject to numerous conflicts and frequently falls short, according to a Times review.

Yelp versus Google: An antitrust court fight plays out in San Francisco. Following years of complaining about Google’s dominance, Yelp sued the tech giant after a federal judge ruled that Google has an illegal monopoly in search.

ICYMI:

CNN’s Harris-Walz interview scores 6.3 million viewers
AI safety bill passes California Legislature
Antipiracy group shutters major pirate business
Michael Crichton’s estate sues over ‘ER’ reboot
Oasis reunites. U.K. government blasts Ticketmaster

Finally …

If you’re looking for some new punk-ish indie pop rock, you could do a lot worse than the new album from Illuminati Hotties. It’s called “Power.” Here’s a standout track, “Didn’t” (featuring Cavetown)