{"id":7921576,"date":"2026-01-05T06:14:13","date_gmt":"2026-01-05T14:14:13","guid":{"rendered":"https:\/\/www.thewrap.com\/?p=7921576"},"modified":"2026-01-05T08:29:51","modified_gmt":"2026-01-05T16:29:51","slug":"hollywood-industry-contraction-2026","status":"publish","type":"post","link":"https:\/\/www.thewrap.com\/commentary-analysis\/columns\/hollywood-industry-contraction-2026\/","title":{"rendered":"Hollywood Shrinkage of 2025 Will Carry On in 2026"},"content":{"rendered":"\n\n\n

The dust of 2025 is still gritty in our mouths as Hollywood looks ahead to 2026 and wonders: Can it get worse? Will it? <\/p>\n\n\n\n

The answer is \u2013 well, yes, it probably will because we are watching the entertainment industry transform in real time. With another 17,000 jobs<\/a> vaporized last year, with a barely-rescued box office result<\/a> and with December closing on the looming merger of market-leading Netflix with legacy brand Warner Bros., we can hardly avoid the obvious: Hollywood has changed. <\/p>\n\n\n\n

I\u2019m not the first to point out that a century-old business model has been disrupted, permanently, by the rise of streaming and tech\u2019s takeover of what was once known as Hollywood. And I\u2019m not even talking about Oracle\u2019s Larry Ellison buying Paramount from the Redstone family. Tech companies Netflix, Apple and Amazon now outweigh Disney, NBCU, Paramount and whatever Warner Bros. will be when the sale of that studio shakes out. Google doesn\u2019t even make content, but its YouTube division is still bigger \u2013 in revenue and audience \u2013 than any competing TV platform. <\/p>\n\n\n\n

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Here\u2019s how I would summarize the year:<\/p>\n\n\n\n

* A domestic box office hovering at $8.9 billion, about even with 2024 but still far below pre-pandemic levels of 2019. <\/p>\n\n\n\n

* The sale of a major Hollywood studio\/conglomerate, the re-merged Paramount and CBS, to the Ellison family after prolonged negotiations and functional blackmail by the Trump administration. <\/p>\n\n\n\n

* The split of NBCU from its declining cable assets, now called Versant. <\/p>\n\n\n\n

* The expected disappearance of a legacy Hollywood studio with the proposed split of Warner Bros. from its declining cable assets, pivoted into a sale process for the whole company.<\/p>\n\n\n\n

* The rise of YouTube as the singular, dominant television platform. <\/p>\n\n\n\n

* The flight of production from California. <\/p>\n<\/div>\n\n\n\n

* The decline of DEI efforts in Hollywood. <\/p>\n<\/div>\n<\/div>\n<\/div>\n\n\n\n

Is the consumer better off? That\u2019s up for debate. <\/p>\n\n\n

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\n\t\t\tRead Next<\/strong>
\n\t\t\tEntertainment and Media Layoffs Up 18% With Over 17,000 Jobs Slashed in 2025<\/a>\n\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

But the vibrant system that created prosperity for a 360-degree ecosystem of movie studios, TV networks, producers, actors, writers, directors, their agents and managers and lawyers, plus an entire web of below-the-line craftspeople and various production experts has receded over the horizon of history. <\/p>\n\n\n\n

It does not mean Hollywood is disappearing. The business of making stories for television and movies continues. But the opportunity for financial success is vastly limited to the studios themselves and a rarified layer of talent, whether that’s the super-writer-producer Taylor Sheridan or a tiny number of stars like Tom Cruise or the “Frozen 3” cast<\/a> Kristen Bell, Josh Gad and Idina Menzel. <\/p>\n\n\n\n

The Hollywood business model has <\/strong>faced shifts wrought by new technologies before. That included adding sound to the movies, the invention of television, the rise of cable and then premium cable, or the advent of DVDs. For those willing to widen the aperture of entertainment, \u201cchange\u201d has not always been a harbinger of \u201cworse.\u201d <\/p>\n\n\n\n

As a trend, technological change has generally meant a broadening of entertainment to include new formats and functions, usually with the result of expanded opportunity, revenue and profits. After all, DVDs did not kill theatrical moviegoing, despite the worries at the time. In fact it brought a flood of new consumer spending that floated movie profits for more than two decades. <\/p>\n\n\n\n

But the latest wave of technological change has resulted in something different. Since 2010 or so, the advent of streaming has sparked a disruption not seen before, driving viewers to the all-you-can-eat smorgasbord of online entertainment. With the additional disruption of the COVID lockdown in 2020, the public has grown less willing to go to a movie theater to see a film that will be streaming on their TV just a few weeks later. <\/p>\n\n\n\n

This shift is skewing the entire entertainment industry further toward television, even as \u201ctelevision\u201d has come to exclude broadcast and cable channels. (And by the way \u201cBroadcasting and Cable\u201d has ceased to exist as a publication, I recently learned.)  <\/p>\n\n\n\n

I\u2019ve been having this argument with Hollywood corporate executives, both current and retired, as we all survey the wreckage of 2025 and wonder what will come next. My friend Jeff Sagansky – currently a media investor who has run Sony television, CBS Entertainment and NBC – has warned repeatedly that abandoning the cash-rich cable networks, for which programmers stopped providing new content a few years ago, would hasten their extinction. Old contacts reach out from their retirement havens in Hawaii or Portugal and confess how glad they are to have gotten out of Hollywood when they did. Lovers of independent film look around for a saviour and find none. <\/p>\n\n\n\n

Peak TV has unpeaked. Bidding wars at Sundance are mostly distant memories. Who will make the dreams for the dream machine? <\/p>\n\n\n\n

\u201cYou can trace the disintegration of Hollywood to Netflix making original series,\u201d one of these executives said to me recently, echoing the complaints of myriad others over the lack of back-end profits. \u201cLook at where we are. It\u2019s all coalescing around three or three-and-a-half companies, that\u2019s it. They\u2019ve all taken their cue from Netflix. They\u2019ve cut back. They own all that\u2019s on the air. No one gets any other participation\u2026 They [Netflix] only have 8% of viewing time, but they dictate the roadmap for how the whole industry is functioning.\u201d<\/p>\n\n\n\n

What\u2019s worse, he said, \u201cthey\u2019ve consistently ratcheted prices to consumer, every year, way above inflation.\u201d<\/p>\n\n\n\n

Another executive, recently retired, wondered what happens to TV production if Netflix gets Warner, with its trophies of HBO, Warner Bros. Television and Turner. \u201cA big part of Hollywood companies is TV series production. It hasn\u2019t been movies. So what the f–k will happen with the center of the visual entertainment business – that\u2019s TV shows? What will happen to that?\u201d<\/p>\n\n\n\n

All of this doom-telling and I haven\u2019t even mentioned the arrival of AI. That\u2019s because that particular disruption has not yet landed on Hollywood\u2019s shores with two feet. But it certainly will. <\/p>\n\n\n\n

I\u2019ll end on one hopeful note: disruption always means opportunity. So if the entertainment industry has contracted, that in itself has left space for new ideas, fresh products, alternate platforms. I\u2019m looking at you, Creators. <\/p>\n\n\n

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\n\t\t\n\t\t\t\t\t\t\t\"iShowSpeed,\t\t\t\t\t<\/a>\n\t\t
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\n\t\t\tThe Creator Economy Rocketed in 2025: Here Are the 9 Biggest Takeaways<\/a>\n\t\t<\/div>\n\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Peak TV has unpeaked. Bidding wars at Sundance are distant memories. Who will make the dreams for the dream machine?\u00a0<\/p>\n","protected":false},"author":30,"featured_media":7922619,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"single-full-width-with-ads","format":"standard","meta":{"byline":{"profiles":[{"type":"byline_id","atts":{"term_id":504342,"post_id":7302570}}]},"_links_to":"","_links_to_type":0,"nb_breaking_email_type":"1dee58a6-43f6-4d1a-b280-850b428c6e36","nb_breaking_template":"pro-single-story.html","nb_breaking_from_name":"TheWrap","nb_breaking_subject":"","nb_breaking_preview":"","nb_breaking_list":[],"nb_breaking_header_img":7555404,"nb_breaking_should_send":false,"nb_breaking_content":"\n\n\n\n\n\n\n

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