Economic Volatility and Hollywood
This might be obvious, but Hollywood would prefer to make movies and TV shows at times of economic stability, and not volatility.
The main reason for all of this is that movies and TV shows only make money if consumers go to the theaters or tune into TV shows.
That's the very foundation of all entertainment.
We're already seeing American movies debuting in China dropping. Could other countries follow suit?
The reason is that when people start to save money or cut out spending due to a fear of a recession, they usually cut things like entertainment from their budgets at first.
That means getting rid of streaming services, they stop going to theaters, they spend less on VOD, and lots of other savings.
Television networks and streaming platforms rely on advertising revenue, which can be impacted by economic instability.
Companies may reduce their advertising budgets during downturns, affecting the revenue streams of these platforms.
Linear TV, already facing decline, is particularly vulnerable as marketers prioritize performance-driven advertising over brand campaigns in cautious environments.
You don't have to take my word for it.
MoffettNathanson’s Michael Nathanson wrote in a report that “Given the ongoing secular headwinds facing the linear TV ecosystem, we worry that television could mirror the fate of radio and newspapers during past recessions.”
This could cause the loss of around $45 billion dollars in revenue. He continued, “Should budgets shift away from linear TV at an accelerated pace, we see risk of a more permanent reallocation toward connected TV and broader digital channels.”
Movies are in the same boat.
Warner Bros. Discovery, CEO David Zaslav apparently sent a note to his execs telling them to start saving money on projects because of “market volatility and reduced consumer confidence.”
But aside from the main impact on Hollywood, I wanted to look at the trickle-down effects we're seeing on the rest of the industry.
Summing It All Up
Economic stability provides a more predictable and favorable environment for the film and television industry, allowing for greater investment in diverse projects, smoother production processes, and more stable revenue streams.
When that goes away, everyone battens down the hatches, and the workforce suffers the most.
Let me know what you think in the comments.
