What do you think of an industry that is reducing output? In manufacturing, what is commonly said when a company decides to cut production? Is that a sign of a healthy firm?

What happens when it spreads across an entire industry? We often see revenues falling, workers laid off, and bankruptcy looming.

This is the state of Hollywood. It is a topic we discussed for a while and the numbers are backing up how bad things are.

When it comes to output, we see a massive contraction.

In this article we will focus upon the impact this is having and why we are seeing the decline in real time.

The Decline of Hollywood: Television Episodes

What is the product for a Hollywood studio? Obviouisly, this would be movies and television shows. If we break down the latter, we can focus upon number of episodes.

So what is going on here? Quite simply, we are seeing a massive decline.

Some 16,012 total episodes of TV content were produced in 2022, a figure that dropped to 13,300 episodes in 2023 and 11,069 last year, according to a new report from data provider Luminate, which is co-owned by Penske Media corporation, the parent of The Hollywood Reporter. If looking at total hours of TV produced, that figure falls from 14,958 hours in 2022 to 10,405 last year.

This is reflected in the table above. We can see the move from 16,012 soqn ro 11,089. This is a decline of almost 31% in only two years.

Unfortunately, the post-strike bounce did not take place. Regardless of what the opinions are, the numbers remain bad.

We see this across the board.

When viewing this through the lens of shooting days, we see equally horrific results.

Source

Outside the pandemic year, this is the worst we have seen, and by a significant margin. If this was any other industry, with physical products, people would be aghast.

Unfortunatley for Hollywood, the laws of basic finance apply to digital products also.

Fragmentation of Media Acceleration

As stated in the past, Hollywood's destruction will come in two waves.

The first started many moons ago, with the breakup of the monopoly on content distribution. newspapers were the first to experience the impact but it is affecting video also.

Our second wave will come from AI. This was a major point of contention during the strikes, and for good reason. The deal that was struck only solidified the downfall of much of the industry. technology is not thwarted by a contract, especially when it is global.

The major movie studios are in a heap of trouble. Disney is probably the strongest and they are in a world of hurt. That one is large enough to survive the tsunami that is coming. The rest, well they are going to be swallowed up.

Consolidation is already taking place. The AI wave will further impact things as the amount of content is going to spike dramatically. While the raw numbers are not relevant, what is important is the amount of high quality content will keep increasing. The masses have the numbers in their favor.

At the moment, Netflix has a larger market cap than all the other media companies combined. There is a reason for this, outside market irrationality. When we look at the network effects, they certainly favor that company.

Of course, we cannot forget about Google and Amazon, both which are making big moves in the entertainment arena.

The situation was bleak for Hollywood. Any chance of a 2025 rebound was likely interrupted by the wildfires that Los Angeles endured. That only added to the woes facing this beleagured powerhouse of an industry.

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