Date: 07/16/2023
Author: Mr. X
You may be surprised to hear this, but Hollywood is out of ideas and is incapable of writing anything good.
Disney (DIS) is cutting back on some of its most iconic franchises, including Marvel and Star Wars. About $5.5 billion in costs will be cut. CEO Bob Iger, who is only going to be around for a few more years at most, specifically identified Marvel as a problem. “Marvel is a great example of that [urge to increase streaming programming],” he said. “It had not been in the television business at any significant level, and not only did they increase their movie output, but they ended up making a number of TV series. Frankly, it diluted focus and attention.”
Disney is also dealing with a number of disappointing box-office releases.
Ok, scratch that, it’s been putting out bombs.
Ant-Man and the Wasp: Quantumania had the sharpest decline in sales from opening weekend to the second weekend in the history of the franchise. Strange World reportedly lost the studio close to $200 million. Lightyear, the Toy Story spin-off that could have been a surefire hit, also failed. The Little Mermaid live-action remake, at best, basically broke even and more likely lost the studio about $20 million. And let’s not talk about Indiana Jones and the Dial of Destiny, the character-destroying franchise capstone, stands to lose hundreds of millions of dollars. In passing, it’s also essentially ended a franchise that Disney could have exploited for decades if it had handled it with care.
This is even before we get to the larger issue facing the entertainment industry – the strike. The $134 billion entertainment industry is essentially on hold. Writers are essentially fighting against their own extinction, especially with the rise of AI threatening to make many of them redundant. Actors may eventually find themselves in the same position. We’ve all seen the way AI can create artificial characters, and it is not unrealistic to imagine that they will eventually replace some actors altogether, especially for smaller productions and animated shows. Could this be the death of the celebrity?
It certainly could be the death for a good chunk of the entertainment industry. The SAG-AFTRA union is on strike, with actors even walking out of premieres. They are also appealing to the public. Fran Drescher of “The Nanny” pleaded with the public that the entertainment industry is now a “walled-in vacuum” rather than a “gravy train.”
She said:
The entire business model has been changed by streaming, digital, AI. This is a moment of history that is a moment of truth. If we don’t stand tall right now, we are all going to be in trouble.
RIPPED STRAIGHT FROM THE HEADLINES… NOW MORE IMPORTANT THAN EVER
DON’T MISS THIS ABSOLUTELY CRITICAL PRESENTATION
Stocks are plummeting. Consider from Friday:
Disney (DIS) – down 2.04%
Paramount Global Class B (PARA) – down 5.11%
Netflix Inc. (NFLX) – down 1.88%
Comcast Corporation (CMCSA) – down 1.29%
Who has the advantage? The media can be expected to back the strikers and they have, after all, star power. But my money is on the studios long-term.
Here’s why. First, studios are in a cost-cutting mindset. The studios are already looking to cut back on content. This is not the time for aggressively rolling out new content, streaming programs, or “expanded universes.” Instead, it’s time for getting maximum revenue from existing products. The current strike provides an excuse for retrenching that companies need (and want) to be doing anyway.
Second, AI represents an existential challenge to how content is currently generated. Think of the overwhelming use of green screens and CGI in films today. Why does this occur? It’s not just to save costs or to film more quickly. Digital effects allow quick adjustments to be made for international markets or in response to political controversies. Different versions of films can be made for different countries. Entire steps of the filmmaking process can be skipped, as scenes can be delivered quickly for editing.
One could argue that a lot of the charm of filmmaking is lost in this – think of the detailed props that were made for something like the original Lord of the Rings trilogy, and contrast that to what is being done today. However, for better or worse, capitalism on the largest scale selects for the most low-cost solutions possible.
Now think of what will happen with AI. We are already seeing dead actors being used in new films (most notably in the Star Wars universe) and de-aging (as in the new Indiana Jones film). It’s virtually certain we will see more of it used in fields like voice acting, graphic design, editing, and possibly even acting. Obviously, for many jobs in the entertainment industry, this is an existential threat and they will do whatever it attacks to stomp it out. However, for the studios, this is a battle they need to have to secure future profitability. The technology is only going to get better and whatever company can win this victory will have a key advantage.
Do I like this? No, it’s going to be terrible. But it’s inevitable. It’s reminiscent of when Bono of the band U2 growled to Steve Jobs that mp3s would destroy the tradition of the rock album, with different songs carefully selected in a deliberate order as part of a greater project. Steve Jobs said he agreed entirely – but that there was nothing anyone could do about it. Bono and U2 went on to cut ads for Apple.
This brings me to the final element – the content is just bad. It’s not your imagination – shows really are getting worse. In the interest of playing to media and extreme political interests, television shows and movies are playing to an ever-smaller audience. Audiences don’t want to be lectured to; they want to be entertained. As we’ve seen with the collapse of franchises like Indiana Jones and Star Wars, there are real financial consequences to these ideological games. One can’t help but think that some in the studios are welcoming this fight simply because they think writers aren’t worth what they are being paid.
I don’t expect a short-term surrender by studios. Instead, they will go to the mattresses for some time, and new content will come to a standstill. If anything, this will accelerate the drive forwards AI, and may even be a check on “woke” entertainment. Political messaging is a luxury good. As entertainment companies focus on essentials, they may remember that keeping audiences amused is their real purpose. Writers and actors who forget that may be left out in the cold. Indeed, in a few decades, I wonder if actors will even be seen as a prestigious profession, or if they will return to their traditional role as an unclean trade, living on the margins of society.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing
