Box Office: The old Hollywood is screwed…Welcome to the new Hollywood

Box Office: The old Hollywood is screwed…Welcome to the new Hollywood

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Before the pandemic there was a shift happening. Talent agency CAA controlled actors, scripts, producers, how studios were bought and sold, music rights, all the way through to sports contracts. Agents held the power. But today most of the big agencies have sold out to major hedge funds where their first responsibility is to revenue and profits which means yearly growth at all costs. 

Today, it’s not one single thing that is reducing agencies’ grasp but a storm on many fronts that is leaving most agencies with very little space to move. For one, the Writers Guild of America’s has been standing firm that agents not be able to produce/finance movies. With the writers strike in 2019, top Hollywood writers fired their agents and took a little power from the agents: Historically, agents came up with complex structures for their top clients’ ownership, profit participation, merchandise, box office bonuses, etc.  Studios were also masters in creative accounting, keeping as much money from the talent as possible. 

 Then came Netflix with global distribution, hidden streaming numbers, and clear data driven decisions. So agents have yielded much of their power to lawyers and managers.  Agencies have now pushed hard into live events for their music artists, now the industry’s cash cow. But with the global pandemic, nobody is going to concerts or sporting events. The power is no longer with the agencies, it is now with producers whose power for years had been eroded. 

In the 90’s networks realized that there were bigger upsides by paying producers flat fees for their services vs simply buying the US rights and letting producers sell the foreign rights themselves. But now TV is driven by Content demand. 

Netflix is going through a massive commissioning spree as traditional broadcasters and studios pull their content, so Netflix has to make more original content. So does Hulu, Amazon, and Apple TV+. But, so too do the incumbents. 

Previously, CBS, NBC, Showtime, AMC, etc, had to focus on filling 24 hours of programming each day including a mix of new content during prime time and reruns. But that does not work in the streaming world when consumers expect extensive libraries and the ability to binge watch an entire season in one day. 

Everyone has to produce more content and networks, studios, and streamers cannot develop content the way they used to.

Producers who can find content, fully develop it quickly, and earn the trust of financiers who simply look at the budget and a new rich data set behind cast, genre, and other key talent that validates potential audience numbers,  (data that has only really been available for the last 5 years), win. 

There will be fresh blood who will emerge victorious, forming partnerships with filmmakers and writers, creating their own mini studios, developing and delivering content to a machine with an insatiable appetite. Movie theaters are going bankrupt in the next 12 months.

AMC, Regal and Cinemark cannot survive paying multi-million dollar leases on massive buildings that are sitting empty. It’s going to take at least 18 months to get back to any normality and movie chains don’t have enough liquidity to make it work.

Studios have also pushed more of their content straight to their newly launched streaming services as they hope to bolster subscribers during the pandemic.

The ‘Trolls’ sequel went straight to Pay VOD and raked in an estimated $100 million in its first three weeks.  Once theaters open back up they will have a content problem with not enough new movies to fill all their screens. 

All of this coincides with a change in law that will allow distributors such as Warner Bros., Disney, Lionsgate, and yes, Netflix, Amazon, and Apple, to actually own movie theaters.  They will create premium experiences in a way that current owners never could.

Amazon will buy AMC or one of the Big 3. They will do special screening deals for Prime members. They will program content based on the viewing data of Amazon Prime members around each of their theaters and they will market directly to audiences on their own platform to create hype before bigger roll outs both in theaters and via streaming. 

Amazon will also integrate these entertainment venues with Twitch. With esports leagues taking off, screens will be adjusted to double up as esports venues where audiences can watch players compete live with other players from around the world.

Gamers will spend hours at the venues eating from the cafeterias and buying from the Amazon retail and pick up points located in these buildings which traditionally have a huge amount of under utilized space.

Movies, Gaming, Retail, Hospitality. 

For Disney to transfer their stores over to movie theaters is a no brainer. And then there’s Apple who has a massive grip around the music industry and the opportunity to mix music events, movies, and, just as with Disney, relocating their 270 US stores is a very attractive one.

Apple’s Platoon works directly with musicians, bands, and writers to produce, distribute and sell their work (cutting out the record labels) and we could see movie theater stages being used for live concerts backed and promoted by Apple.  

That is only the beginning.

 The death and rebirth of Hollywood is upon us. There are opportunities in every sector of the industry. There really is no greater time wherever you live in the world to be in film and television. But, it is time to innovate and hustle.

 In an attempt to appeal to a wider audience, Hollywood remakes footloose for the Muslim and Jewish world Its basically the same movie, just without Bacon.              

By Bob Pritchard

Paul Ebeling, Editor

Have a healthy week, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.