For well over 100 years, Hollywood’s entertainment industry was the center of the cultural universe – both geographically and as probably one of the greatest brands in history. It had everything: glamour, intrigue, stars and talented people creating some of the most wonderful stories by way of the very best films and television shows ever produced.
People have historically come from all over the world to visit the big studios, to see where the stars lived and died, to be a part of the magic. At the risk of sounding too nostalgic, it was unlike anything else.
I admit I too was enamored and wanted to be a part of it all. After time on Wall Street, I moved to Los Angeles and established The Lippin Group in 1986 with the vision of creating a strategic, business-focused agency that specialized in entertainment and media. Over the last 40 years, we have worked with clients around the world, developed and implemented corporate and publicity campaigns across all platforms as they evolved.
But the Hollywood I experienced when I first arrived on the West Coast no longer exists. From the streaming wars and the rise of YouTube to a global pandemic, labor unrest and disruption generated by AI and M&A — not to mention the political climate and even destructive wildfires — the industry’s view of this “Roaring ’20s” is far different from the last one a century ago. But I believe we are still a long way off from pulling the plug. My optimism stems from this being an inspiring business and an essential part of our culture, something definitely worth saving.
Today, technology is largely seen as the culprit in this whodunit despite it having brought our industry unparalleled progress, including democratized influence, broadband audio and video access and never-before-available revenue opportunities. The issue is that while AI is increasing efficiency at unprecedented levels, it is also forcing us to change the fundamental foundations of the industry: human capital and creativity.
Or at least we think so. Is it possible to have the best of both worlds?
If we approach this with a different mindset anything is possible. One only needs to recall how following AOL’s disastrous acquisition of Warner Bros. a quarter century ago the entertainment industry concluded Hollywood and Silicon Valley were bad fits and the industry just wrote it off to a terrible decision.
Cut to today, with Paramount (with help from the visionary founder of tech giant Oracle, which recently acquired a stake in TikTok), soon to acquire the iconic Warner Bros. studio and its symbol of prestige TV, HBO. The consolidation has elicited Armageddon-like emotions in the creative community. This follows on the heels of Amazon’s acquisition of MGM and its prestigious library and IP, as well as Disney’s deal for 20th Century Fox assets.
While this technological takeover was happening, the industry was too busy to consider what it all meant because it was obsessively focused on meeting Wall Street’s quarterly earnings reports, including its demands for mass layoffs and production cuts to finance massive leveraged mergers. No long-term strategy needed.
Now that our industry is at a crossroads, let’s remember what kept our business on a straight and narrow course over the last 60 to 70 years — predictability resulting from a variety of secondary tiers after TV shows and movies had their network and theatricals runs. The 10 percent of deficit-financed network shows lucky enough to make it past four seasons would enter syndication or the international market with a hundred episodes, with the top sitcoms and episodic dramas poised to make billions of dollars for their creators. Successful theatrical films would go onto earn respectable pay TV and home entertainment dollars, meanwhile.
Streaming changed all of that. With a business model centered around generating tens and hundreds of millions of subscribers rather than ratings, Netflix bought up all the windowing rights so it would have the content in perpetuity.
Having said that, let’s recognize some opportunities:
— Hollywood risk takers must come back and accept less money upfront in exchange for backend rights. In essence, content producers, by foregoing large upfront compensation, could reap the rewards of long-term content ownership over an increasing number of distribution platforms as, for many years, the producers of network television series have done. They have produced their shows at a deficit, later realizing the greatest financial rewards when those shows were distributed in syndication. Taking risks like this would serve as a significant incentive to many producers and increase the supply of great content. And that would help keep Hollywood employed and subscribers pouring into streaming services.
— We have to also find ways to bring predictability back to our industry, while also being flexible so we can let the unpredictability work for us. For example, a serious analysis of content windowing is needed, not to force things to be what they once were, but to best balance consumer expectations with maximum revenues, while not throwing away what works to spite ourselves. Looking at this from a marketing point of view, we need to take a step back and see what works to maximize attention for content that costs billions to make, yet can be promoted so much better. Outside of the industry, I regularly find myself in conversations about the best shows and movies I’m watching, and more time is spent answering questions (What network is it on? How can I watch it? Is it released weekly or all at once?) than talking about the amazing work itself.
I’m not here to criticize the different business models that dictate the disparate strategies of each media company, but rather am espousing the need to find a way to swing the pendulum back to some form of predictability. That would not only make marketing messages easier to convey but allow companies investing so much in this content to maximize their ROI. The result would be increased revenue rather than mass layoffs of the very marketing and publicity teams who are charged with shining a spotlight on it.
And let’s not forget about all of the focus recently on theatrical windows. We are risking losing sight of the marketing benefits of having films in theaters, and the symbiotic relationship theatrical can have with streaming. People who see a giant billboard for a new movie but wait for it to become available on streaming are still seeing the giant billboard for a new movie.
— Let’s figure out how to lean into technology and make it work for us, while also embracing regulation of AI, collaboratively and across borders. We can’t ignore the tools in front of us that can allow us to spend more time strategically and analytically thinking about what’s next to make our business(es) thrive. But we must fight to protect name, image and likeness rights of individuals to ensure that guardrails are up that preserve the truth and punish malicious creation of deepfakes or revenge porn.
— Finally, we must look at the industry more globally than we already are. The world is flatter than ever, and international production is posing a risk to traditional Hollywood via tax incentives, etc., but also brings opportunities in terms of shared storytelling, breaking down cultural boundaries, and eliciting empathy.
Yes, it’s a challenge that productions are moving to other markets. But it’s also an opportunity for us to find amazing stories that we could bring to our audiences wherever they are. The reality is that “international” productions, even if subtitled or dubbed, are so much more accessible than they once were, universal storylines that translate across borders are being embraced, and people, especially younger generations, see all of the above as a net positive, not a burden.
To be successful today, we must take a cue from these consumers, and identify creativity wherever it resides – doing even more business with companies around the world. By the way, we can embrace this reality while also looking to, of course, preserve jobs and opportunities domestically. It isn’t a zero sum game.
The disruption of the entertainment world has been massive, but this isn’t new — Hollywood has faced disruption and claims of imminent extinction before. Can we recover from what has occurred? It is possible but only if the tech world and the traditional studio leaders who still hold high ranking positions in the industry get together and work out ways that are mutually beneficial – and do so with the entire international marketplace in mind. Then, and only then, will we see perhaps the greatest brand revival ever.
Dick Lippin is founder, chairman and CEO of The Lippin Group, a premier communications agency that specializes in representing companies, creators and content.
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