Strap in: We’re recapping Hollywood’s tumultuous 2023. While actors and writers effectively brought the industry to a halt — with unprecedented financial consequences — the “Barbenheimer” phenomenon brought hope and relief to theaters. And as most studios and their executives struggled in 2023, a new trend started taking shape: streamers licensing their shows to competitors.
It’s time for The Business’ annual year-in-review Megabanter. Kim Masters, Puck News’ Matt Belloni, and Bloomberg’s Lucas Shaw discuss the biggest entertainment stories of 2023.
The story of the year: Hollywood strikes
Writers Guild of America and SAG-AFTRA set record-setting walkouts that combined lasted almost six months.The grinding experience caused the biggest disruption in Hollywood’s recent history. While writers ended their labor action on September 28, actors only reached a resolution by early November, when the heads of major studios – Disney’s Bob Iger, Donna Langley from Universal, Neflix’s Ted Sarandos, and David Zaslav from Warner Bros. Discovery – came to an agreement with SAG members. Actors voted to ratify a three-year contract and return to work in early December.
Were the deals reached good? While writers seemed to have gotten several of their asks, Lucas Shaw says the months-long negotiations were not good for the industry and the economy and wonders what the long-term ramifications will be.
“I don't think that the increased cost that will come from these deals will impact output as meaningfully as people think. I think the studios were already going to cut back,” Shaw says. “But the big question looming over all of this is where the deal is so significant that it was worth the pain in the meantime.”
Matt Belloni agrees. “I don't know that we'll ever know whether the cost of six months of work stoppage and the billions of dollars sucked out of the economy was ultimately worth it when you look at the gains made.”
The big wildcard: AI. While artificial intelligence was not a significant topic last year, Belloni says it became the dominant narrative, especially during the actors’ strike.
For Kim Masters, everyone was flying blind because they knew AI was developing quickly, but didn’t know what would ultimately become. Once the deals were signed, “They're hoping that that will be at least the entree to further discussion.”
Were the AI gains enough? “I don't know that the protections that these guilds negotiated on the AI front are going to be meaningful, long term,” Belloni notes, but at least there are some guardrails in place now.
Shaw believes AI protections won’t work. “The Guilds… were worried about how the studios were going to use artificial intelligence technology, when to me the real threat to them is not how the studios use it, but how new companies use it… I'm not sure how much say the studios are going to be able to have in how artificial intelligence technology upsets talent.”
More: What’s the year-end bottom line for Hollywood after dual strikes?
Popcorn, a Barbie website displayed on a phone screen alongside an Oppenheimer poster in the background are seen in this illustration photo taken in Krakow, Poland on August 1, 2023. Photo by Jakub Porzycki/NurPhoto/REUTERS
Box office surprises
“Barbenheimer” became the 2023 Summer box office phenomenon, and brought relief to the studios and theaters.
Did anyone see this coming? Masters says she didn’t. “I thought people would certainly go to Barbie, but how many people are sitting through a three-hour movie about Oppenheimer? So it surprised me.”
Belloni points out that every year there’s at least one movie breakout that appeals to a mass audience, but he wasn’t surprised that Barbie and Oppenheimer were hits.
Can it be repeated? “Barbenheimer” was unique. “I think the fact that they fed on each other, and that they leveraged the power of social media and especially TikTok to galvanize these very disparate audiences into this phenomenon, I think is significant, but probably not replicable,” Belloni adds.
And while other studios will try, “Barbenheimer” “can’t be forced.” “Many of the franchises that were sputtering and were trying to kind of happen because shareholders wanted them to happen, not necessarily because the audience wanted them to happen,” Belloni explains, citing Transformers, Indiana Jones as examples that didn’t work.
What’s the lesson? These movies were not only “broadly appealing to their core audience,” and critics Belloni says, they were successful because they delivered. “They were fresh, and original.”
For Shaw, it’s been tricky to draw a lesson from “Barbenheimer. He was taken aback at how poorly franchises like Fast, Mission Impossible, and some of Marvel and DC movies did at the box office, and he believes big budget movies – Napoleon and Killers of the Flower Moon – won’t immediately set “the world on fire,” nor will toy movies.
“We do live in this world where the movies that really work, feel like cultural events,” Shaw says. “That's what every studio has to aim for. You can't just assume that if you make a decent movie with a name, people know people are going to show up.”
That’s what Belloni calls “eventising.” “The limbo bar has been lowered, you have to really get down and make it across… it used to be that you could do a decent job and people would show up. Now that's not the case.”
A hard year for studios and executives
How did Apple, Amazon, NBCUniversal, Paramount Pictures, Warner Bros. Discovery, Disney and their CEO’s fare this year?
Apple Studios
After Paramount Pictures backed out of making Killers of the Flower Moon, Apple stepped in to make the $200 million film. Masters wrote about the partnership between Martin Scorsese and the cash-rich tech giant in 2020, which, she says, is finding out “that you can lose a lot of money very quickly on a movie that's expensive and doesn't work.”
Killers hasn’t performed well in the box office, even though Shaw noted in October that Apple bet big on cinemas.
Amazon
While Apple hasn’t focused on cost cutting, Amazon has been under pressure to do so, and “are being judicious about what they do, in shifting their strategy,” Shaw says.
That’s because while its Prime Video Thursday Night Football has done well, shows like Reacher, which is very popular – as are Bosch and Jack Ryan – Amazon has also wasted a lot of money.
Ben Affleck’s $90 million movie Air was a financial flop for Amazon. Its $120 million, 3-year deal with Fleabag actress Phoebe-Waller Bridge to create new smash hits for the studio hasn’t come to fruition. Masters penned down in April how Amazon’s bet on shows like Daisy Jones and the Six and Citadel were hampered by the studio’s “lack of vision” for its streaming service. Citadel cost Amazon about $50 million per episode. “Citadel was just a bonfire of money,” Masters points out. “They reshot. They recut, and they renewed it.”
And Jeff Bezos’ biggest bet has been with Lord of the Rings: Rings of Power, the most expensive TV show costing a hefty $58 million per episode. “Citadel is a global spy show. Lord of the Rings is based on this huge hit, and I think they make second seasons of those shows to save face,” Shaw says.
Earlier this year, Amazon hired Courtney Valenti, a veteran in the industry, to head its film, streaming and MGM slate. “It'll be interesting to see what she does, because she is a seasoned executive with a lot of relationships, and I'm sure she will be more disciplined, and that will be helpful in that part of the business,” Masters notes.
NBCUniversal
Comcast Corporation’s media and entertainment arm fired earlier this year its then CEO Jeff Shell for allegedly having a series of affairs with employees. “He was gone, and that was very surprising to people,” says Masters.
More: Megabanter: NBCUniversal scandal, Disney vs. DeSantis, Fox fires Carlson, strikes
Following Shell’s exit, Mike Cavanagh came onboard as NBCUniversal’s interim CEO, and Donna Langley as its chairman.
Where do Comcast and NBCUniversal sit in all of this? Aside from Shell’s saga, Shaw sees Comcastl as “one of the only places that seems stable.”
While Comcast still makes most of its revenue from cable – which is declining – and internet – which is doing great – it didn’t invest quite as much in its streaming services, Peacock. “[They have been] ridiculed a bit because it's sort of the eighth or ninth in play service, but it means that they haven't had to cut back as dramatically,” Shaw explains.
Disney acquired Hulu’s 33% stake from Comcast for about $8 billion.
What are they going to do next year? While Paramount Global and Warner Bros. Discovery’s CEOs just started discussions about a possible merger, Comcast’s “biggest role right now is suiter,” Belloni remarks, if it wanted to make a deal, these two companies would be its prime target.
Shaw agrees. “Everyone is sort of waiting to see if they're the one that wants to make a big play for one of these [struggling media] companies.”
Paramount Global Chair Shari Redstone arrives for Variety's Power of Women luncheon in New York City, U.S. on April 21, 2017. Photo by Brendan McDermid/REUTERS
Paramount Studios
Shari Redstone has had a rough tenure heading Paramount Global. She stepped in at “the exact wrong moment when all the legacies are challenged, Master says.
As the company keeps losing its value, Restone received several multi-billion dollar offers to take any of Paramount’s assets (CBS, Comedy Central, BET, Showtime Networks, Nickelodeon, MTV and the film studio Paramount Pictures) off her hands, but she has refused. “This can't go on like this. They're going to find themselves sold for parts if they keep it up,” Belloni notes.
Shaw sees her resistance as an act to sell the whole company. “That suitor just doesn't appear to be there. Most of the potential buyers or I don't think are very interested.”
Now, Paramount Global and Warner Bros. Discovery are talking about a merger.
Warner Bros. Discovery
WBD’s CEO David Zaslav had a rollercoaster year. Zaslav shocked the industry innumerous times this year. He tossed some finished movies because the studio needed the money and the tax write offs. He hired the ill-suited Chris Licht to head CNN, who stayed on the post briefly, and tried to shut down Turner Classic Movies. “He's committed one unforced PR blunder after another,” Shaw says.
Despite all that, the company’s performance has been good. “They had the number one movie of the year, [Max/HBO], especially in the first half, delivered just a string of great shows, and the stock price has bounced back,” Shaw notes.
Where is WBD’s biggest problem? With television advertising business in tatters, and WBD depending on ads for its cable networks, “its problem is more prosaic,” Shaw says. “If that doesn't bounce back, they're in deep trouble.”
Belloni agrees. “Now finding out that the TV ad market is not delivering that cash. So they've got to figure out where to get it elsewhere.”
Disney
After deposing Bob Chapek and returning to his post in 2022, Disney’s CEO Bob Iger also had a tremendously challenging year. Its movie Marvels had the lowest-grossing in MCU movie’s history. “It's like all of their creative engines decided to sputter at the same time,” Belloni says.
Since Chapek moved Disney’s original animations to streaming during the pandemic, there’s a question whether the genre still works in theaters. While Pixar’s Elemental slowly grossed to almost $500 million, Strange World and Wish bombed at the box office. “I think the challenge here for animation is to get people in the door because I think we are seeing longer tails on some of these movies,” Belloni adds.
Chapek took a lot of the blame for streaming Disney’s movies and the question is, can the audience be re-trained to go back to the theater? “Nobody knows the answer,” Shaw answers. “I understood why they did it at the time. If anything, I probably thought it was a good idea because of the situation during the pandemic. But there is now just so much entertainment available at home that to convince people to go to a theater is really challenging.”
Another issue is that Disney has focused on animated sequels such as Super Mario Bros., Migration, which “are premised on the ability to open” high. “You don't spend $20 million on an animated movie, if you don't think you can open it to $40, $50, $60 million a year. If that's not the case for original titles anymore, there's going to be repercussions throughout the animation industry,” Belloni notes.
With all the problems, Disney’s stock is “languishing,” which re-opened the door to activist shareholder Nelson Peltz to nominate himself and Jay Rasulo as Disney’s board setting up a battle over the future of Disney, their long-simmering feud with Iger and the company’s management. Iger has become more vulnerable this time around because the cutting of 1,000 jobs and budget-slashing strategy hasn’t worked.
“I think this shocked [Iger’s] system because he was the ultimate Hollywood royalty,” Masters says, and she asks whether the board will side with Peltz this time.
“The thing that Iger can be comfortable with or can retort to is, there is no company facing their problems who has figured out [a] solution,” Shaw says. “The one company [that is] kind of sitting pretty is Netflix and they don't have the same problems.”
More: Disney CEO Bob Iger talks succession, Marvel, ABC sale
More: Disney initiates staggered layoffs of 7,000 employees
Streamers open the (licensing) floodgates
One of the biggest trends of the year has been the studios’ “willingness” to license library shows to other streamers. It started out with Netflix.
“We just saw them put a show Warrior that is just being canceled off Max, they're putting that on Netflix. And Netflix is happy to take it because they have the money, they have the audience, and they have the ability to turn library shows into major hits,” says Belloni. “That's I think one of the big stories of the year.”
What does all this mean for 2024?
Well, we’ve got some predictions — plenty of ‘em. Check back next week, when Masters teams up with Shaw and Belloni again to read the town’s tea leaves for the year ahead.