Burn Hollywood burn

All is not well in Hollywood.  A strike by actors and writers over fears of how studios might use AI, and the falling value of residuals (money received by performers for repeat showings of their work), has shut down Tinseltown. A place still reeling from the impact of Covid lockdowns. Next year’s release schedules are up in the air.

The failure of big budget films, such as Indiana Jones: The Dial of Destiny, and superhero pictures, like Black Adam and Ant Man 3, which had traditionally been money spinning bankers for the studios have added to the sense of crisis.  Streaming services like Netflix and Disney Plus have seen subscription growth slow as the price of subscriptions rises and the cost-of-living bites. Netflix has even been forced to add a cheaper subscription tier with ad breaks to stop the rot.

It's at Disney, the biggest beast in the Kingdom, where the crisis seems most acute. The share price is at a nine-year low. A decade ago, Disney spent billions to acquire Marvel and LucasFilm (the home of Star Wars) and have sweated the IP with new films and TV series being regularly launched based on the properties. After years of success, it seems superhero fatigue has set in. New Star Wars films and series have been met with indifference and in some cases downright anger as fans complain about how the universe has been messed with.

Live action remakes of Disney’s treasured back catalogue like The Little Mermaid have had a mixed reception, and Toy Story producer Pixar, which it acquired in 2006 for more than US$7bn, is no longer the hit factory it once was. Its theme parks are struggling, and Disney has found itself embroiled in the US culture war. Decisions to improve the diversity of its casts and stories have been met with political resistance from the US right. Their streaming service, Disney Plus, which surged when launched in the pandemic is now struggling and losing money.

There is no greater sign of the problem facing studios than the decision to shelve almost-completed films and TV series. The US$90m budget Batgirl will never see the light of day. The film was written off in post-production to save money on tax in August 2022 by Warner Bros. Disney recently canned Nautilus, a series based on 20,000 Leagues Under the Sea, even though it was all but done. Other TV series have also been pulled off streaming platforms to save money.

Even Amazon Prime is feeling the pinch. Its US$250million Man from Uncle rip-off series, Citadel has been chalked off as a failure. It wanted to create a franchise, with the plan to create localised versions in different regions put on hold. A second series is said to be in the works but there is not much hope. This follows the £100m disaster of the Rings of Power. An attempt at a Lord of the Rings prequel, which was hated by fans, and created indifference among non-fans. Streaming services keep audience figures largely secret, but the word is that it was a colossal disaster with most people failing to get to the end.

Internationally, there is a problem as well. China used to be a lucrative market for a select few Hollywood films each year. The Chinese Government, embroiled in its own battle with the US, has restricted access to its market to US films, especially those in which it dislikes the politics (Top Gun Maverick for example) and has been pushing its domestic industry in its place. The world’s most populous country, India, has always preferred its own home-grown Bollywood industry.

All in all, Hollywood appears to be in an existential crisis. Too many streaming services, big budget flops, continued decline of terrestrial television, and less access to big international markets are a big black cloud over the Sunshine state.

Hollywood has had existential crisis before. The arrival of sound, the growth of network television in the 50s and 60s, and the coming of the streaming services which killed the lucrative DVD market, but it has always found a way to adapt. The current way to survive may be to get smaller and refocus - Disney is rumoured to be selling its TV networks like ESPN and ABC, and perhaps even Marvel and LucasFilm.

One bright hope for Hollywood has been the performance of Barbie and Oppenheimer at the box office. Released on the same day, the two films have grossed over US$2bn already on budgets of around US$145m for Barbie and US$100m for Oppenheimer.

After years of superhero films, it seems audiences are happy to pay for more original, interesting, and complex films. Frankly, having suffered through Indiana Jones: The Dial of Destiny, the change can’t come a moment too soon.