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It is party time in Hollywood this weekend leading up to the Oscars ceremony Sunday evening. And yet for the business crowd, the movers and shakers who finance, negotiate, and otherwise operate the entertainment industry, the mood could not be worse. Guess who is ruining the fun? Yep, the giants of Silicon Valley, mostly notably Netflix (NFLX), Amazon (AMZN), and Apple (AAPL).
Change is hard. And Hollywood has had lots of it, what with business models turned topsy-turvy and a new guard pushing out the old. “The playing field is totally confusing to a lot people,” says one trusted advisory to industry power brokers. “Change in the ecosystem is profound. We’re in between chapters right now, and you have all the angst and anxiety that goes along with it.” Adds the frenetic super-agent Ariel Emanuel, host of his own bold-faced-name party that kicks off the weekend: “All the traditional backbones of the business are disintegrating. It causes trauma.”
Netflix kicked all this off by making movie and TV-show streaming for real. What started as a cord-cutting trickle has become an “over-the-top”—meaning non-cable, non-broadcast—tsunami. Now the other highly capitalized tech powerhouses—including Google through its YouTube TV “skinny bundle” offering—are threatening to decimate the film and TV industries as we know them.
Indeed, the status of the much-maligned bundle is a good metaphor for the industry’s problems. For decades cable, satellite, and broadcast networks packaged programming at lucrative rates for themselves—until technology allowed consumers to rebel. Now new bundles are forming. Amazon is a delivery service with TV shows; Apple offers iCloud storage and also music. It’s all quite perplexing. “We have no idea what the bundle of the future is,” says media-and-entertainment analyst Rich Greenfield. “It turns out consumers love bundles. Just not the bundles they’re being offered.
Consolidation, already under way, will pick up steam. Announced blockbusters include AT&T-Time-Warner (though it’s in trouble), Disney-21st Century Fox, and Discovery-Scripps. Hollywood dealmakers expect a reunion of CBS and Viacom, and one smart observer I spoke to expects Verizon to come after them once they’ve merged.
It’s all enough to put someone at a traditional Hollywood entertainment company in a horrible mood to party.
Have a good weekend. (I’m rooting for The Post.)