The businesses of Hollywood—comprised of major film studios, streaming services, and other media and entertainment firms—lost $542 billion in value in 2022.
- The total market, as listed on the Dow Jones Media Titans index, shrunk from $1.35 trillion to $808 billion last year.
- A Financial Times report says investors are souring on streaming services, which has triggered declining prices for media companies like Disney, Comcast, and Netflix.
- Greater competition between streaming, home entertainment, and theatrical distribution has also diluted the market, as recession fears force consumers to cut back on subscriptions and advertisers back away.
- Entertainment companies have poured billions into competitive streaming services, trying to catch a portion of the lucrative market that expanded during the COVID-19 pandemic. Still, spending on new content has extended beyond subscription revenue.
- Morgan Stanley analysts predict that many streaming services are likely to collapse or be consolidated into other services.
Why it’s Important
Streaming services were a necessary form of entertainment during the pandemic, but with consumers eager to leave the house and the economy slowing purchasing power, streaming is suffering. Streaming company Roku has lost 91.2% of its value since June 2021. Other major streaming services are incurring heavy losses and have begun instituting advertising, cracking down on account sharing to address lower revenue, and laying off staff.
“Walt Disney shares, down about 45%, are heading for their biggest annual fall since 1974. Paramount Global has dropped 42% this year and Netflix 52%, while Warner Brothers Discovery has tumbled 63% since its creation by combining Discovery and AT&T’s WarnerMedia,” says the Financial Times.
The success of films like Top Gun: Maverick and Avatar: The Way of Water shows that audience demand for entertainment has never been higher. As we previously reported, agenda-free entertainment is holding strong and attracting large audiences.
Conservative outlet Breitbart suggests that the faltering demand for these entertainment brands is tied to their perceived “wokeness,” and that embracing culture war battles has correlated with lower demand from general audiences for companies like Disney, which sparred with Florida Governor Ron DeSantis earlier this year over LGBTQ+ content in its films.
“It’s been a perfect storm of bad news. I’ve been covering this sector a long time, and I’ve never seen such a bad collection of data points before,” says media analyst Michael Nathanson.