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Jennifer Salke (right), before leading Amazon MGM Studios, worked at Aaron Spelling Productions, 20th Century Fox Television and NBC Entertainment. Joe Maher/Getty Images
The winds of change are blowing through the hierarchy of Hollywood executives. For the first time, television veterans have been elevated to the very top of the food chain over movie folks and are running entire content divisions across various legacy media and streaming companies. And for some reason, almost no one is talking about it.
Former Sony Pictures Television execs Zack Van Amburg and Jamie Erlicht oversee Apple (AAPL)’s entire studio, including film. Jennifer Salke, before leading Amazon MGM Studios, worked at Aaron Spelling Productions, 20th Century Fox Television and NBC Entertainment. Netflix (NFLX)’s Chief Content Officer Bela Bajaria cut her teeth at CBS and Universal Television. Incoming Sony Pictures CEO Ravi Ahuja, current chairman of Sony’s Global Television Studios, came to the company from Walt Disney Television. Donna Langley, NBCUniversal’s chair of studio group and chief content officer—arguably the best film exec of the last decade—reports to lifetime cable expert and Comcast President Mike Cavanagh.
This is a stark departure from Hollywood’s historical track record. For roughly a century, motion pictures have been held in the highest regard and, with that, film executives were appointed to the top positions within content empires. Clearly, we’ve turned a page.
By exploring the underlying drivers of this change, we can better understand value creation in entertainment today and the longer-term challenges that await. Will this new structure save Hollywood from the painful contraction it’s currently enduring and the threat of irrelevance it may be facing in the long term?
The natural course of Hollywood
The simplest answer for why Hollywood is reorienting itself around new decision makers is natural turnover. Entire fortunes can change in between a director yelling “Action” and “Cut.” With traditional entertainment (film/TV) attempting to stave off encroaching competition, the industry wants to be more fluid, dynamic and actionable.
“What they’re trying to do is consolidate power rather than have a disjointed, disconnected or decentralized business model,” Paul Dergarabedian, a senior media analyst at Comscore, told Observer. “They’re bringing everything into one nucleus. That economy of scale helps on the financial side as economic and technological developments drive these changes.”
Leadership changes happen all the time and are often in response to evolving market dynamics. That makes sense. But it doesn’t explain why TV executives specifically are now the new hot hiring commodity at top levels.
The prestige of film has long been the foundational support beam of the industry even if the financials didn’t always match. Over the decades, creative talent has desperately tried clawing its way onto the big screen. Even today, the pop culture conversation favors movies. Seldom do you see a tidal wave of commentary about a streaming original movie or non IP-TV series failing, but how many headlines and tweets have been devoted to the recent theatrical flops of Megalopolis and Joker: Folie à Deux?
In the early 2000s, the movie business began to bifurcate, with very narrow prestige movies on one side and huge franchise films on the other. The globalization of the film business led to simpler, more four-quadrant mainstream stories that appeal to all demographics (old/young, male/female). At the same time, thanks to bold storytelling choices and developing distribution technologies, TV enjoyed a meteoric rise in the 21st century. Suddenly, the cinematic production values and viewing experience of the big screen could be approximated at home. (It’s also not a coincidence that the Marvel Cinematic Universe’s rise was built on sequential storytelling that mirrored small screen structure). The recurring familiarity of TV is an easier sell for audiences.
“You don’t have to create a new brand every time you launch a new season. Subscribers already know the brand of a Game of Thrones and they want to see more of it,” David Offenberg, an entertainment finance professor at Loyola Marymount University, told Observer. “It’s much easier to get viewers reengaged and re-subscribed when they’re familiar. In film, other than sequels, you’re introducing a new sub-brand to audiences, trying to get them excited for one 90-minute event, and then they’re a free agent again.”
What the numbers tell us
Television holds a distinct advantage over film in a number of key performance metrics. Global theatrical box office revenue hit a record high in 2019 of $42.3 billion. By comparison, total TV revenue in 2023 in the U.S. alone was $220.9 billion. Not much of a competition.
Theatrical film is often still the best launching pad for franchise development, but there’s a distinct ceiling that is getting lower. In 2023, Universal Studios led Hollywood film studios with $1.3 billion in profit against $11.6 billion in revenue. Disney-owned ESPN alone generated $2.9 billion in profit in fiscal 2022 (which ended in September 2023).
In streaming, which is Hollywood’s north star, TV series tend to contribute a lot of retention value. According to Parrot Analytics, where I work as Senior Entertainment Industry Strategist, TV accounts for a greater share of total catalog demand than film for six of the eight major streaming services thus far in 2024 (though theatrical films absolutely do still help drive streaming growth).
We often see this on the title level too. Take Netflix, for example. According to the company’s self-reported viewership, The Night Agent is its seventh most-watched English language TV series ever, and Damsel is its seventh most-watched English language film as of this writing. On the surface, that might seem like an apples-to-apples comparison. But over their first two quarters of availability, The Night Agent added roughly 392 percent more global subscribers and retained around 224 percent more existing global customers than Damsel, per Parrot Analytics’ Content Valuation metrics.
The recent transition within streaming from subscription video on demand (SVOD) to advertising-based video on demand (AVOD) has also created a greater need for executives familiar with the ad-supported content space. Longer-term streaming revenue and profit growth relies on ad-friendly programming that attracts broad audiences. This differs from the edgy, experimental content that drove the initial ad-free streaming boom in the Peak TV era. That’s traditional TV, baby!
The future of entertainment might be neither TV nor film
Now that we understand the hows and whys behind the new industry architecture of the present, we can cast our eyes toward the uncertain future.
Linear TV, while declining, still spits out billions in cash flow, and there are some signs that U.S. cord-cutting may finally and mercifully be stabilizing (we’ll see). By casting TV execs as the captains of these media teams, Hollywood is also hoping to build a more consistently profitable business out of streaming. Hard to argue with that goal. In the short term, this may be the “necessary structure to keep the business alive,” according to Professor Offenberg.
Longer-term, however, there exist a litany of challenges that may not be solvable by traditional TV and film executives. Growth across the entertainment ecosystem is largely being driven by the creator economy, gaming, and other new media. No one knows where the executives of the future will come from as Hollywood has recycled the same C-suite names over and over in recent years.
“I’m not quite sure traditional TV or movie leadership matters as much in the long term, because neither one of them are necessarily going to have the experience and expertise to lead you through a world of Roblox, TikTok and Fortnite,” Simon Pulman, an entertainment lawyer and co-chair of Pryor Cashman’s Media + Entertainment and Film, TV + Podcast Groups, told Observer.
After topping all media distributors in July, YouTube’s U.S. watch-time was up another 2 percent in August, per Nielsen. The global video game market is projected to reach north of $282 billion in 2024. Approximately 65 percent of U.S. teens watch at least one hour of TikTok per day. The competition for eyeballs has never been this fierce and audience behavior has never been as fluid as it is right now. As a result, film and TV have never faced as uphill of a battle as this. There’s a fear that film and TV alone will not be enough to sustain the business one day.
Gen Z’s spending and media habits can differ from previous generations. But no media company is quite ready to sacrifice immediate earnings in order to rebuild for a nebulous future. As such, the break-in-case-of-emergency plan may very well be to just tread water better than the person next to you.
“I think everyone in established media is probably thinking, ‘How can we ride this out for a few more years,’ because they don’t want to be the one who rocks the boat and forces a difficult transition,” Pulman said. “They’ve all come to the conclusion that the bigger picture issues facing Hollywood right now are the next generation’s problem.”
Perhaps it shouldn’t be surprising that, at a time of unprecedented challenges, the industry is embracing new leadership practices. But while these changes may raise the floor in the interim, Hollywood is still leagues away from a concrete plan for the future of media. The longer that remains the case, the more painful that future may be.
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