In his capacity as a Columnist for California Sports Lawyer®, Founder and Managing Attorney Jeremy Evans has written a column about Hollywood's business strategy and changing landscape for production and filmmaking in the city named after angels.
You can read the full column below.
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Where expansion, mergers, and acquisitions once dominated the headlines in Hollywood, there has been a return to the mean. In the beginning of the streaming wars, studios were forced to become streamers and streaming platforms were forced to have a singular focus on growing subscribers regardless of revenue, debt, and budgets. In the present, there is a regression or reformation toward the mean that is forcing compliance with budgetary and future of the market concerns.
The aforementioned is why Fox sold its entertainment assets to Disney, Amazon purchased MGM, YouTube scaled back its original content, and Skydance Media purchased Paramount. The issue is amassing assets to compete in an increasingly shrinking market for subscribers and streaming platform fatigue (too many places and prices to watch content). The interest and demand from executives and stockholders is now advertisement revenue, engagement, minutes watched, subscriber longevity and awards/recognition for content.
As budgets have scaled back, so have requests for permits and production in Los Angeles. It is also true that other factors have led to a reduction in production in the city named after angels. Los Angeles and California are increasingly difficult places to do business with regulations, taxes, and traffic. It is also true that competition for production locations have grown where other states, cities, and countries have also added tax benefits and become welcoming places to film.
The newest consolidation is with TKO moving its holdings under one larger umbrella. The idea is that with one larger company the valuation and stock price will rise. And indeed it has in 2024. TKO’s move highlights a tightening of the proverbial budget belt.
Studios and streamers are finding, like they always have, that budgets are built on either building off existing hits and franchises, or building new ones. One could look back on seemingly simpler times where films were made for the sake of filmmaking as opposed to whether something would be a hit. The problem is that DVD sales once allowed for a second bite at the commercial apple for revenue. One the other hand, streaming could serve as the DVD sales of new where a theatrical run is followed by a streaming home. In other words, DVD sales are now digital streaming sales through subscribers.
Studios and streamers can also base payments to talent on performance on the platform. Studios and streamers will need to be disciplined about releasing films in the theaters for a dedicated theatrical run, build an audience and interest, and then release on the streaming platform. The falling attention span has created a panic to go direct to consumer through a streamer. That might be shortsighted for the theatrical and social experience and a moneymaking opportunity. Hollywood has the opportunity to continue its dominance with slight changes to its business model.
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About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
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