The winds of change are blowing among Hollywood executives. For the first time, television veterans have been elevated to the top of the food chain above movie personalities and are running all content divisions at various legacy and broadcast companies. And for some reason, almost no one is talking about it.
Former Sony Pictures Television executive Zack Van Amburg and Jamie Erlicht oversee all of Apple’s ( AAPL ) studios, including film. Jennifer Salke, prior to leading Amazon MGM Studios, worked at Aaron Spelling Productions, 20th Century Fox Television and NBC Entertainment. Netflix ( NFLX ) Chief Content Officer Bela Bajaria cut his teeth at CBS and Universal Television. Incoming Sony Pictures CEO Ravi Ahuja, the current chairman of Sony’s Global Television Studios, came to the company from Walt Disney Television. Donna Langley, NBCUniversal’s group chairman of studios and chief content officer—arguably the best film executive of the last decade—reports to lifetime cable expert and Comcast President Mike Cavanagh.
This is a surprising move in the history of Hollywood. For almost a century, motion pictures were considered very important and, therefore, film directors were appointed to high positions within the content empires. Obviously, we have turned the page.
By examining the underlying reasons for this shift, we can better understand value creation in entertainment today and the long-term challenges that lie ahead. Will this new structure save Hollywood from the painful contraction it is currently enduring and the threat of irrelevance it may face in the long term?
The natural course of Hollywood
The simple answer to why Hollywood is reorienting itself to new decision-makers is natural profit. Every treasure can change between the director shouting “Action” and “Cut.” With traditional entertainment (film/TV) trying to avoid competition, the industry wants to be fluid, flexible and efficient.
“What they’re trying to do is consolidate rather than have a disjointed, disjointed or fragmented business model,” Paul Dergarabedian, senior news analyst at Comscore, told the Observer. “They bring everything to one nucleus. That economy of scale helps on the financial side as economic and technological developments drive these changes.”
Leadership changes happen all the time and are often in response to market fluctuations. That makes sense. But it doesn’t explain why TV executives in particular are now the hot new recruiting commodity at the top levels.
Film reputation has long been the backbone of the industry even if finances have not always been consistent. Over the past decades, creative talent has struggled to make it to the big screen. Even today, the pop culture conversation favors movies. It’s not often that you see a huge wave of commentary about a first-run movie or non-IP-TV series that fails, but how many headlines and tweets have been devoted to recent theatrical flops Megalopolis again Joker: Folie in Deux?
In the early 2000s, the movie business began to bifurcate, with very small films on one side and large franchise films on the other. The globalization of the film business has led to simple, four-quadrant stories that appeal to all types of people (old/young, male/female). At the same time, thanks to bold storytelling options and improving distribution technology, TV enjoyed a meteoric rise in the 21st century. Suddenly, cinema production values and the big screen viewing experience could be scaled at home. (It’s also no coincidence that the height of the Marvel Cinematic Universe is built on sequential storytelling that characterizes the small screen structure). Recurring TV adaptations are easy to sell to audiences.
“You don’t need to create a new brand every time you launch a new season. Subscribers already know the type of a Game of Thrones and they want to see more of it,” David Offenberg, professor of entertainment finance Loyola Marymount University, he told the Observer. “It’s very easy to get viewers to re-engage and re-subscribe once they’re used to it. In the film, without the sequels, you introduce a new genre to the audience, you try to make them happy with one 90-minute event, and then they become a free agent again.”
What the numbers tell us
Television has a distinct advantage over film in a number of important performance metrics. Worldwide box office revenue reached a record high in 2019 of $42.3 billion. By comparison, total TV revenue in 2023 in the US alone was the same $220.9 billion. There isn’t much competition.
Theatrical film is often still the best launching pad for franchise development, but there is a distinctly lower ceiling. In 2023, Universal Studios led Hollywood film studios with $1.3 billion with a profit compared to 11.6 billion in revenue. Disney-owned ESPN is the only one produced $2.9 billionto in the 2022 fiscal year (ending September 2023).
In broadcasting, which is Hollywood’s star of the north, TV series tend to offer a large amount of retention. According to Parrot Analytics, where I work as a Senior Entertainment Industry Strategist, TV will account for a larger share of catalog demand than film for six of the eight largest streaming services by 2024 (although theatrical films will still help drive streaming growth).
We often see this at the subject level as well. Take Netflix, for example. According to the company’s self-reported observers, The Night Agent is its seventh most-watched English TV series, too Maiden it is the seventh most-watched English-language film as of this writing. On the surface, that may seem like an apples-to-apples comparison. But over their first two quarters of availability, The Night Agent it added about 392 percent of its global subscribers and retained about 224 percent of its existing global customers. girl, with Parrot Analytics’ Content Rating metrics.
The recent shift in broadcasting from subscription video on demand (SVOD) to ad-based video on demand (AVOD) has also created a huge demand for executives familiar with the ad-supported content space. Long-term streaming revenue and profit growth depend on programs that are suitable for ads that attract large audiences. This differs from the obnoxious, experimental content that fueled ad-free live streaming in the Peak TV era. That’s traditional television, baby!
The future of entertainment may not be TV or film
Now that we understand the how and why behind the creation of the new industry of today, we can cast our eyes to the uncertain future.
Linear TV, while declining, is still spitting out billions in revenue, and they are other symptoms that US cord cutting may finally and mercifully stabilize (we’ll see). By casting TV executives as the captains of these media groups, Hollywood hopes to build a sustainable business outside of broadcasting. It’s hard to argue with that goal. In the short term, this may be “a necessary structure to keep the business alive,” according to Professor Offenberg.
However, in the long term, there are a number of challenges that may not be solved by traditional TV and film management. Growth across the entertainment ecosystem is largely driven by the creator economy, gaming, and other new media. No one knows where the future executives will come from as Hollywood has recycled the same C-suite names over and over in recent years.
“I’m not sure that traditional TV or movie leadership is more important in the long run, because none of them will have the experience and expertise to lead you in the world of Roblox, TikTok and Fortnite,” Simon Pulman. , an entertainment attorney and co-chair of Pryor Cashman’s Media + Entertainment and Film, TV + Podcast Groups, told the Observer.
After leading all media distributors in July, YouTube’s US watch time rose 2 percent in August, Nielsen. The global video game market is expected to reach north of $282 billion in 2024. Almost 65 percent of US teenagers watch at least one hour of TikTok per day. The competition for eyeballs has never been fiercer and audience behavior has never been as fluid as it is right now. As a result, film and TV have never faced such an uphill battle as this one. There is a fear that film and TV alone will not be enough to sustain the business one day.
Gen Z’s media spending habits may differ from previous generations. But no media company is ready to give up quick cash to build a brighter future. Therefore, a break-in-case-of-emergency plan may be treading water better than the person next to you.
“I think everybody in the older media is probably thinking, ‘How can we do this for another few years,’ because they don’t want to be the ones rocking the boat and forcing a difficult transition,” Pullman said. “They all came to the conclusion that the biggest image problems facing Hollywood right now are a problem for the next generation.”
Perhaps it should come as no surprise that, at a time of unprecedented challenges, the industry is embracing new forms of leadership. But while these changes may be lifting the floor for now, Hollywood is still leagues away from a concrete plan for the future of media. If that remains the case, the future could be very grim.
