Hollywood Predictions 2025

I'm not sure we want to do this, but here we go anyway.

Here we are folks, the last week before the traditional Hollywood break between Christmas/Hanukah and New Year's. It’s time to savor the sweet year-end bonuses or the sweet severance package you got from Paramount.

I was going to review of 2024, but I decided I didn’t want to relive it, and guessed you didn’t either, so I went with five predictions for Hollywood in 2025.

1. Anti-Trust - Halfway through 2024, there was a lot of talk about Anti-Trust lawsuits coming for Hollywood in 2025. Trump 2.0 will effectively put that to bed. In a legal and economic system that first and foremost protects the interests of the super-wealthy, something as quaint as protecting the consumer and the marketplace with Anti-Trustactions becomes unnecessary regulation.

   Unless Trump has specific grievances against a Hollywood company, his DOJ will be happy to let Billionaires keep Billionairing.

   What does this mean? It seemed the DOJ had their sights on CAA and WME as they have become media behemoths with their hooks into representation, marketing, sports teams and leagues, and last but not least, film finance as a vehicle to produce and own content. That last one flies in the face of specific labor laws that prohibit agencies from repping talent and owning the properties they work on, and cites the practice as a conflict of interest.

   There were also rumors about breaking up WB/Discovery, but they seem to be doing it themselves as they prepare for sale. The separation of WB’s Linear Cable Assets from production and streaming says it all. They are going to be sold for parts.

2. Legal Situation to keep an eye on: The one to watch is the CAA/Range Media lawsuit. CAA is challenging that Range is procuring work for their management clients which is the legal function of agencies. Though I haven’t seen the filing, I have to imagine that Range will counter-sue, that CAA are acting as negotiating producers which is the legal function of Managers. Both parties are correct, as both industries as a whole have been coloring outside the lines for a long time now.

   

   The eventual decision or settlement will redraw almost every line there is. If CAA wins, Management companies get smaller and more production-focused. If-Range Media wins, Management companies will become behemoth talent representation firms with legal production arms, and take over industry supremacy….. which leads me to:

3. Consolidation - Without the fear of the DOJ following up on any monopolizing, there are likely to be some big sales and mergers across the representation landscape. Look for big deals both on the agency side and the management side alike.

   Most notably, keep an eye on UTA to be acquired. Some say CAA is the buyer, but I doubt that. My money is on WME, as they are trying to keep pace with CAA post the ICM acquisition.

   Other obvious targets for potential suitors are Verve, Paradigm, and IAG.

   Why? The WGA action against their agents in 2021, and the WGA and SAG/AFTRA Strikes in 2023. Add into it the production contraction. The rubble left in the wake of these events have put midsize agencies in particular out over their skis, and altered the economics of the entire industry.

   Without the big money back-end talent and literary packaging of content for talent agencies, the only real representation money left is Movie Stars. Not only do they get 10’s of millions in fees, they increasingly get bac- end percentages. They also are now brands unto themselves with product deals that dwarf any acting fees they receive. Agents are now latching on to Star’s tequila deals, soccer teams, fashion lines, and fragrances. That’s where the money now resides, and it’s becoming a race to see who can own the most Stars.

   This leaves Journeyman Actors out in the cold. You may ask, where are the next Stars going to come from? Mendaciousness doesn’t care, they’ll cross that bridge when they come to it. That I see Jason and Travis Kelce in almost every commercial on TV may tell us the answer. Where’s Chuck Connors and Jim Brown when you need them?

   If you’re wondering, what about making Movies and TV Shows, they’re not being made by studios anymore. They are made by tech companies, and they make the rules now. This leads me to:

4. Production Becomes Even More Global - If that’s possible. I’ve ranted about this quite a bit already, see my article: Hollywood Nomads, but I’m not done.

   Netflix just released its 2024 Q3 numbers. While the US and Canada remain stagnant, they improved their subscriber base by 5.07 million. Most of these gains were in the Asian Pacific Market (APAC) and the European, Middle East and Africa Market (EMEA.). Netflix also improved their Ad Tier subscriptions 35%, mostly in those markets as well.

   

   Sheesh, the writing on the wall here is plain and simple, Netflix will make content in the languages they need to retain the subscriber gains, particularly in South Korea, where they are seeing the best growth. The path of least resistance, and the best deals will be to shoot in the country where you plan to release.

   I was somewhat buoyed by the gains in the ad-tier until I realized that no one in South Korea has a clue about the Kelce brothers, or have any real desire to watch NFL Football at their local Buffalo Wild Wings. The closest one is in India, so I don’t think even Uber-Eats delivers.

   With the UK and Georgia operating with no cap tax incentives, and the favorable currency exchange rates being preferable to the US dollar pretty much everywhere, keep assuming we live in a truly global marketplace. Which leads me to:

5. California Doubles the Film Tax Credit, but doesn’t manage to fix the problem. I think we all agree that Governor Newsom’s plan to increase the tax incentive program from $330 Million per year to $770 Million per year is a damn good thing. With the benefits being, for every $1 spent, $24.40 in economic output is created it’s a no- brainer. The issue is the fine print.

   Doubling the incentive will help, but if the criteria for an award does not change the effects will be limited on California’s Entertainment production business.

   The current criteria only allow tax credits for Below-the-Line costs on movies and some made for Television projects with budgets of $10 Million and over. What’s more, the awards go to the projects that employ the most people first, which points all of the funds towards Studios and tentpole movies.

   To have an effective program, the criteria must be changed to include Above-the Line costs (Actor’s fees, Director’s fees and Writer’s fees,) and be available to independent films and TV with budgets under $10 Million, TV Commercials and Music Videos. Without making these changes, the effects of the plan will do little to help the local crews and vendors.

   To that end, I have begun working with the team at CA-United. This is a grass roots effort to lobby Sacramento in pursuit of the passage of the $700 Million Legislative Bill, and to lobby for the criteria to be the most inclusive and effective. You can sign the petition, or apply to become part of the effort at CAUnited.org.

   

   I’m hopeful that real changes can happen to bring production back to Los Angeles. However, even Hollywood son, Arnold Schwarzenegger, while Governor could only manage to get $100 Million a year with the same lackluster criteria. The Agriculture and Tech Lobbies tend to stand in the way, so I think we’ll get the tax credit approved, but the criteria will remain lacking. Get involved if you can.

6. And one for good luck: TikTok, Youtube, and Games, Oh my!: Viewing trends of consumers, particularly young consumers, are increasingly migrating to shorter stories and gaming.

   The US TikTok ban is supposed to go into effect on January 19th, 2025, the day before Trump’s Inauguration. The Don has flip-flopped on this issue over the years, but… There is $1 Trillion (yes Trillion) invested in TikTok by the US Venture Capital Industry. You can bet they are lining up at Mara-Lago to make sure their investments don’t go poof. They will find a way to make TikTok continue in some form going forward.

   YouTube is the most watched content on the planet. Even more than Netflix. That format will continue to reign and expand. However it also grabs eyes and ad dollars at a dizzying pace. YouTube and TikTok, believe it or not keep people away from movie theaters and streaming in numbers that affect everything from the viability of Move Studios to how the industry will handle future Collective Bargaining Agreements for Entertainment Labor.

   Games. All I have to say is the video game industry is now a $200 Billion a year business. The briefest of looksreveals $200 Billion not being spent on traditional or streaming media. For anyone still wondering about how we arrived at this place in the history of Hollywood, the audience has been slowly fracturing for a few decades now.We are now seeing the residual effects of that.

So, that was a lot. I’m quite hopeful about 2025. Hollywood, despite all of its problems, continues to find its way. Projects are getting made, and people want stories. They need stories, and in one way or another, we’ll provide them.

I remain bullish on the future. So, to you and yours, a Happy Holiday.

Steve