The Current State of the Industry and the Future Impact of AI Hillary Lewis April 18, 2024
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The Entertainment Industry: How did we get here and what is the future impact of AI?
A pandemic followed by a recession and twin strikes, add the sudden rise of AI, the over-production of original content, changing viewing patterns, potential bundling of streaming platforms the list goes on and on. The entertainment industry is in a state of flux that has not been seen in decades. When the smoke clears, where does that leave us? What really is the future of the entertainment industry? How are networks and studios adopting AI, and what does that mean for the rest of us?
CreativeCOW's Contributing Writer, Hillary Lewis ventured to SXSW 2024 in Austin, TX, one of the country's largest conferences in tech and film, to get a pulse on these questions.
Some of the biggest industry leaders were in attendance, including SAG-AFTRA National Executive Director, Duncan Crabtree-Ireland; CTO of Paramount Global, Phil Wiser; CEO and founder of Roku, Anthony Wood; VP Product of Adobe Express, Ian Wang; Vimeo SVP of Product, Zohar Dayan; and notable writers, directors, actors, media analysts, AI executives, and other leaders in the industry.
First up: What is the current state of the industry? The biggest question on everyone's mind is How did we get here? Why is our industry still in such a disarray? The Hollywood strikes ended six months ago, so why does content production remain at a standstill? Will the industry ever recover?
There were an overwhelming number of panels at SXSW covering this very topic. One specific panel, The Death of Peak TV A 2024 Post Mortem on Production Downturn' led by Tyler Aquilina, Media Analyst for Variety's Intelligence Platform, shed some light on just how we ended up here.
According to a mountain of data, Aquilina says the industry had been approaching a tipping point long before the Hollywood strikes began. So the first thing that we should really take note of here is that 2022 was the year that TV finally actually peaked. The term Peak TV' was coined well before TV output finally crested and then fell.
The Death of Peak TV' presentation shows the gradual shift from cable and broadcast to SVOD, i.e. streaming
The Death of Peak TV' presentation shows the original series output each year by category of content.
As shown above, in 2023 the industry as a whole saw a 20% drop in original series output across all platforms, plunging from more than 2,000 titles in 2022 to just over 1,600 last year. That came after two decades of almost continuous growth.
There were, of course, other years with small dips in content one for the writer's strike in 2007-08, and one for COVID. However, those dips were never more than 7% a sharp contrast to last year's 20% drop. We also saw a spike in production immediately proceeding both of these time periods another contrast to the stagnant production levels we've seen in 2023-24.
The year 2020 also happened to be when the streaming wars really got going. Disney+, HBO Max, Peacock, Discovery all of these new platforms started popping up beginning in late 2019. And they all decided to follow the model Netflix built, aiming to entice more and more viewers away from cable to streaming by producing massive amounts of original content. More content than anyone could ever dream to watch.
So in 2021 and 2022, we see an unprecedented influx in TV outputs with these new streaming companies throwing billions of dollars into production and racking up massive deficits in the process. The problem is most of these companies weren't turning a profit. Their main goal, and the only thing Wall Street cared about at the time, was increasing their subscribers.
That is, until something very important happens in 2022 Netflix loses subscribers in Q1 of that year, the first time they'd ever reported a drop in subscribers. This is what starts a chain reaction and triggers the beginning of the fall of Peak TV. Investors begin to pay a lot more attention to how much money these legacy media companies are spending AND how much they're losing.
So while there are many events in 2023, like the twin Hollywood strikes, that bare the brunt of the blame for the current state of the industry, the true death of Peak TV was happening before most of the industry was even aware.
How are networks and studios responding to these changes? So what happens now? Has corporate greed ultimately killed the industry? Or are other factors also at play? How will streaming change in the coming years? The guesses are endless but the consensus seems rather bleak for the entertainment industry for some time.
First, networks and streaming companies are taking a step back from over-producing in all areas, only prioritizing their most successful content. More careful considerations for IP-based blockbusters (think The Last of Us and the newly greenlit Monopoly film by LuckyChap and Lionsgate), prestigious awards-based titles (think Oppenheimer or Dune: Part 2), and a strong focus on bringing more sports to streaming (Disney is refocusing a big part of their budget on this).
The projected global spending in 2024 of Sports programming; Disney is set to invest the most in sports out of all other streaming companies
Aquilina also suggests streaming companies will favor unscripted content in general over scripted moving forward, and we'll see more reruns' returning to platforms.
Streaming has typically been filled more by scripted than unscripted. But that is going to start changing. Streaming will look a lot more like cable, fewer scripted originals being produced. Unscripted is a lot cheaper. In tandem with that, I think streaming will start relying a lot more on reruns' which
