Do Executives Dream of Electric Films?: Hollywood deals with an Identity Crisis

By Pau Brunet-Fuertes, Edited by Emma Smith

Since its inception, Hollywood has navigated a complex relationship with economics and corporate interests. The surge in subscription video-on-demand (SVOD) platforms and the consolidation of media conglomerates have sent shockwaves through the industry, resulting in two significant strikes and a notable decline in traditional exhibition systems. This seismic shift signals a crisis in Hollywood, where movies have historically served as both entertainment and cultural agents, challenging societal norms and beliefs. Traditionally, cinema has thrived as a communal experience, whether in public spaces or homes. However, the rise of SVOD platforms, or 'streamers,' has upended this paradigm, transforming cinema into an unpredictable social phenomenon that challenges ideas of globalization and cultural imperialism. Unlike previous industry disruptions, such as the advent of television or multiplexes, streamers redefine distribution windows rather than expanding them. This paper delves into the transformation of Hollywood, exploring how it has evolved into an entity deeply entwined with Silicon Valley and influenced by Wall Street even beyond its economic dimensions in a crisis that reverberates throughout the whole creative process. Hollywood faces an existential crisis, one that extends beyond economic considerations and is deeply intertwined with the process of creating, engaging with, and exploiting stories.

The film industry has undergone a transformative journey, shifting from a model that relied on traditional distribution methods, such as box office, DVDs, and television, to the current data-driven age dominated by SVOD platforms. As noted in Forbes’ article "How Netflix Changed The Way We Watch Movies and Television Forever?," this transition has been marked by the decline of physical DVDs and the rise of unlimited content libraries accessible in exchange of a monthly subscription fee without needing to attend a theater or video store (Forbes). While DVDs provided studios with limited insights into viewing habits, they offered clear data on best-selling titles and long-running sleeper hits. However, the rise of SVOD platforms ushered in a wealth of data analytics that allowed the industry to gain a deeper understanding of its audience. This data-driven approach has fundamentally changed how films are produced and marketed, disrupting the business and creative model.

The industry's evolution took another dramatic turn with the onset of the COVID-19 pandemic. As Richard Yao highlighted in his article "Hollywood is Disillusioned with Streaming," “the social distancing measures encouraged during the pandemic accelerated this shift towards streaming,” leading to a significant disruption in the traditional moviegoing experience. With theaters shut down and audiences hesitant to gather in crowded indoor spaces, the demand for streaming services skyrocketed. By mid-2021, SVOD consumption doubled from 2019, accounting for 73% of US households (Palomba 364). This sudden surge in SVOD subscriptions further accelerated the shift in the distribution paradigm. During 2020 and 2021, streaming platforms like Netflix, Amazon, and Apple+ were willing to pay substantial amounts for content, such as The Tomorrow War (2021), Greyhound (2020), and Hotel Transilvania: Transformania (2022). Other studios decided to create their own platforms and use them to premiere their own massive tentpoles. For example, HBO Max and Disney+ released over numerous film titles that cost over $100 million each on their platforms. Avid moviegoers found themselves turning to streaming platforms to satisfy their entertainment needs, as streaming offered the convenience and safety of home viewing. The pandemic-induced changes in consumer behavior may have a lasting impact on the future of movie theaters, prompting a reevaluation of the traditional exhibition model and a greater emphasis on hybrid release strategies that cater to both in-theater and at-home audiences. As Hollywood grapples with these shifts, it becomes evident that the industry is navigating uncharted waters in the online data era, where consumption statistics are reshaping the way films are experienced and marketed.

The rise of streaming platforms and their consumption-based model has led to a significant surge in film production, sparking concerns about its sustainability. Today, major players and studios are more focused on the economics and algorithms driving these platforms rather than on moviegoers or household consumers. Writer and professor Howard A. Rodam affirms, “When you have companies focus on profits, they do what the algorithm tells them to do,” so, the lack of transparency of the data affects the development of original ideas as they are based on consumption more than artistic development (Ago). From the creative side, filmmakers are pushed to navigate uncertain waters without knowledge of what the audience may desire. Critics of this system have pointed out that this shift in priorities could be moving the industry away from physical and geographical engagement, such as theaters and festivals, as well as reducing media exposure due to shorter promotional windows. This shift may also lead to overproduction of films and series without a clear understanding of their real impact on moviegoers. According to The Numbers, a film database website, the United States alone produced over 1,600 movies in 2019, a drastic increase from the 431 films made in 2009. Just before Pandemic, Netflix premiered over 370 movies and shows as originals, and that was equal to all US film and TV industry combined (Jang). This 375% increase is unprecedented and far exceeds previous market shifts. Although, the number of films produced has been consistently rising over decades; there were significant spikes in the 1980s and late 1990s due to the introduction of VHS and DVDs as well as the production of films specifically for those formats. However, the level of film production seen in recent years has been driven by a massive business guidepath instead of a steady and sustainable rise in production. As Georg Szalai writes in his Hollywood Reporter piece, “Rather than being the new sliced bread, investors and executives have accepted that streaming is, in fact, not a good business—at least not compared to what came before.” Consequently, streamers, producers, studios, and creatives, are facing a reality in which there is an unsustainable equilibrium between demand and creativity. This opens up questions about quality development and distribution processes in movies produced recently within the streaming platforms ecosystem. While 2019 marked a peak in the number of films produced, the pandemic has since led to a stabilization of around 1,300 films per year. In 2023, the industry understood that the state-of-the-art is in an economic and creative crisis. The strikes from actors and writers as well as the massive losses are proof of that crisis.

The analysis of how streaming platforms impact the creative process necessitates a profound observation of their economic and social ambitions. This observation is intricately linked to processes of globalization, and the nuanced interactions encompassed in the notions of grobalization (1) and glocalization (2). Platforms have played a critical role in shaping filmmaking as more inclusive by facilitating more productions, promoting diverse talents, and allowing for a broader range of stories to be told. However, it is crucial to remain cognizant of the main challenge seen in worldwide streaming: homogenization of content and economic precariousness. While for those eager to leave their mark in Hollywood, the large transnational media companies are “globally popular because of ‘[their] capacity of certain texts to seem familiar regardless of their origin, to seem part of one’s own culture, even though they have been crafted elsewhere’” (Mirrlees 179). When it comes to grobalization, platforms leverage the growing demand for instant content access among audiences as a means to reach larger viewership quickly. That rapid access and the global mediatic homogenization of information and lifestyles provokes a higher demand for content. On the other hand, while cinematic globalization seen in platforms such as Netflix resulted in a diffusion of homogenic ways of life, their venture on other local cultures also emphasized what some media analysts named glocalization. According to Divya Anujan, David J. Schaefer, and Kavita Karan in their article “The Changing Faces of Indian Women in the Era of Global Bollywood”, “Glocalization was the ‘interpenetration of the global and the local,’ resulting in culturally hybridized and contingent social formations –‘something’– emphasizing how indigenous agents could appropriate global influences for unique and unpredictable ends'' (111). This positive output shifted how some individuals appreciate international stories and castings but, at the same time, the demands from streamers pushed to the previously mentioned unsustainable overproduction with shrinking budgets domestically and internationally, creating an economic precariousness for creators.

In the wake of a rapidly evolving cinematic landscape, Hollywood's filmmakers find themselves navigating a precarious economic reality that diverges significantly from the traditional movie-making process. This paradigm shift unfolded at a pace that exceeded even the most optimistic of expectations, leaving the industry grappling with a pressing need to adapt its media and labor policies. The repercussions of this swift transformation manifested in the form of strikes initiated by the Writers Guild of America (WGA) and the Actors Guild of America (SAG-AFTRA) during the spring and summer of 2023. These strikes not only underscore the urgency of addressing the challenges posed by this digital era but also raise a thought-provoking question: did the advent of streaming platforms usher in the emergence of a new working class of film professionals? Professor Steven J. Ross observes, "An aspect that is unlike other strikes is the existential crisis faced by actors and writers when being threatened by AI" (Ago). This threat has economic implications as it can diminish work wages and participation. Indeed, these strikes are a direct response to significant industry changes that necessitate a renegotiation of how, when, and under what circumstances creative work is performed. This sentiment is echoed by Miranda Banks, a professor at Loyola Marymount University, who notes, "Strikes only happen when there are significant changes in the industry that demand a renegotiation of how and when the work is done in an industry. Oftentimes, there are technological changes that modify the landscape of content creation." Ted Hope, a prominent producer in the industry, emphasizes the critical importance of transparency in understanding how their projects are performing. This transparency is a direct result of the profound alterations that have occurred in the creative and distribution system as a result of technological advancements. In Ted Hope's words, "This is a totally different business, and they do not depend on entertainment." The changing industry landscape has led to a significant depreciation in the value of a film over time, decreasing the level of royalties derived from some creative work. This reality has far-reaching implications for the careers and aspirations of both creatives and actors. Altogether, these seismic shifts in the industry pose challenges and opportunities, prompting Hollywood to reassess its relationship with technology, storytelling, and the creative professionals who shape its future.

Movie studios and streaming platforms have undergone a transformative shift, where film production now plays a pivotal role in shaping their brand identity and engaging with their audience. This evolution has given rise to a business model that prioritizes attributes like loyalty, originality, and accessibility over traditional quality markers, such as theater experience and the societal implications in that event such as navigating urban spaces to reach a theater or place that event in a personal schedule. Antony Palomba notes in his research on this emerging production paradigm that "original content empowers streaming services to mold their brand image, allure fresh subscribers, and retain existing ones" (173). This approach represents a significant departure from the conventional box office model, where films were meticulously crafted with theaters and moviegoers in mind. For the distributors to secure coveted screenings in theaters, a film had to be perceived as both a work of art and an exceptional source of entertainment. Also, theaters needed to know how large the marketing strategy for the titles premiered would be, including the star power, critical reception, and festival appearances. The collaborative efforts of theaters and distributors were geared toward enticing moviegoers who were seeking the immersive experience of sharing a few hours in a darkened auditorium with strangers. Contrastingly, the contemporary model is solely based on fostering brand loyalty through a monthly subscription fee. As Palomba states, "Consumers derive the most benefit from the price of streaming services compared to any other product attribute" (180). However, this shift carries a specific risk for consumers as they may believe a platform is overpriced compared to other services. The contemporary redefined relationship between viewers and content has profoundly impacted the entire production landscape and the creative process itself.

The exploitation of stories has evolved into a complex challenge between industrial and artistic interests amidst the massive change seen in the filmmaking business.. Many writers, directors, and producers wonder who is watching their films. While the box office numbers are still far from pre-pandemic years, the numbers still offer a clear relationship with a real audience who stay engaged. This physical and intellectual relationship is in conflict with the in-home experience, which also faces the opaque understanding of view numbers shared by streamers that, on many occasions, is not audited by any third party such as Comscore or Rentrak (3). The opacity in the consuming numbers is also reflected in the lack of understanding of the streaming experience. As Christopher Nata affirms, “there is a lack of evidence to explore the antecedents of moviegoers’ viewing experience in the context of [streaming] platforms,” which is in contrast with larger studies around the theater experience. Nata points out how the performed analysis solely focused on brand and marketing experience but rarely used film attributes such as genre, cast, or prestige. “The viewing experience has the most significant positive impact on the intention to recommend a platform and the intention to continue a subscription” (177). The strong structural relationship between the platform, the brand, and the consumer experience alienates the artistic aspects related to film development, which can contribute to the lack of understanding of movies as an independent subject and push them to be a piece in a larger object, the platform.

Additionally, the previous model of film release was crafted around its theatrical debut, providing it with a prolonged presence in the media spotlight and a wide-ranging exhibition path. Each phase, from the initial theater screening to television and streaming, presented a new opportunity for success. These phases earned movies traction and resonated with viewers across multiple platforms, ensuring long-lasting exposure. However, the actual high-speed production paradigm could compromise the filmmakers' long-term exposure and income stability. While it provides an auspicious entry point for industry newcomers, many of them part of underrepresented groups, the vast amount of content can lead to oversaturation and a lack of continuity. Hence, this saturation becomes a missed opportunity to expose a larger audience to a diverse perspective. In this hyper-competitive arena, films may experience shorter periods of exposure and lower income potential, resulting in unstable careers marked by financial insecurity. In essence, while streaming platforms offer a broader canvas for filmmakers to showcase their stories, they also bring complexities related to media exposition and saturation that require careful consideration. The challenge lies in balancing the democratization of cinema with addressing the potential downsides of overproduction and its impact on emerging talent and the industry's long-term health.

In this era of cinematic evolution, the film industry finds itself at a crossroad as the traditional movie experience fades and the race to retain streaming subscribers intensifies. With the declining popularity of traditional movie experiences and the increasing competition among streaming platforms, Hollywood struggles to identify its potential audience. Without a clear understanding of its audience, the industry struggles to define its purpose in this rapidly shifting landscape. Amidst this uncertainty, the emergence of Artificial Intelligence (AI) looms as both a technological marvel and a creative challenge. While AI offers innovative tools for film production, it raises fundamental questions about the essence of storytelling and cinematic artistry. The industry's constant need for fresh content to satisfy the demands of streaming platforms is also impacting wages and working conditions and disrupting the creative and exhibition process. The sector faces an existential threat as studios prioritize rapid content production over the film experience. This has led to a shift away from the immersive theater experience, which has been the industry's hallmark for over a century. In navigating this transformative moment, Hollywood must strike a delicate balance between technological advancement and the preservation of its artistic and cultural heritage. The industry's future hinges on its ability to rediscover its connection with audiences, adapt to the evolving demands of the digital age, and uphold the cinematic tradition that has been its feature for over a century.

Notes

1. Grobalization is defined by George Ritzer as the worldwide ability of a capitalizatic organization to increase their power to the world (Anujan, Schaefer, Karan 111)

2. Glocalization, the simultaneous occurrence of both universalizing and particularizing tendencies in contemporary social, political, and economic systems (Encyclopedia Britannica).

3. Comscore and Rentrak are two American-based global media measurement and analytics companies that provide data and analytics to entertainment industries.

Works Cited

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