(Welcome to the Entertainment Strategy Guy, a newsletter on the entertainment industry and business strategy. I write a weekly Streaming Ratings Report and a bi-weekly strategy column, along with occasional deep dives into other topics, like today’s article. Please subscribe.)
Two bits of bad news broke in January:
- Hollywood’s “historic” Radford studio center defaulted on a loan and was taken over by a creditor, Goldman Sachs.
- Shoot days in Los Angeles remain in abysmal shape, dropping 16% year-over-year in 2025.
All of which is to say, it still feels like dark times for the entertainment industry, especially since the signs of life so many others keep seeing (like the creator economy) seem incredibly overhyped to me. I plan to dive into some specifics of the creator economy in future issues, but one issue sticks out to me right now:
Normal working conditions on vertical dramas and micro-dramas are abysmal: specifically, 18-hour days for non-union (i.e. low) wages.
Indeed, it seems like industry standard conditions in the creator economy are the conditions IATSE wanted to strike over. I look forward to reading more coverage on this in 2026!
It’s time for another edition of my regular (every three months or so) column: The Four Horsemen of the Media-pocalypse, in which I cover the fall of theaters, the decline of the cable bundle (and streaming not being as profitable as the cable bundle of yore), the growth of piracy, and the rise of AI. There’s some potential good news for theaters, piracy and the cable bundle…and potential bad news for theaters medium-term and bad news for streaming customers.
And after all of that, I’ll share my (possibly controversial) take on the layoffs that wracked Hollywood in 2025.
Let’s dive right in!
Theaters: Will Netflix’s Acquisition of Warner Bros. Kill Theaters?
Obviously, talking about movie theaters, the biggest news of the last three months was Netflix attempting to buy Warner Bros., which left tons of people wondering/worrying, “What happens to theaters?” best illustrated by these headlines:
Frankly, I don’t think people are wrong to worry! When Disney acquired Fox, the number of theatrical films went down. (A fact I think I was one of the first people to point out over at The Ankler.)
And, obviously, Netflix (or their executives) hates sending films to theaters!
This has led to Netflix CEO, Ted Sarandos, repeatedly reassuring everyone that, don’t worry, we’re definitely going to keep sending Warner Bros. films to theaters, first saying that they’d commit to the contracts they already signed (which reassured no one), then committing to a 17 day window (which theaters hate) and then telling the New York Times that they’d commit to a 45 day window (while remaining coy on if that means PVOD or SVOD).
Being blunt, yes, I do think that either the film division at Netflix or the film division at Warner Bros (or both) will reduce the number of films they make if this merger closes. That will put additional pressure on movie theaters in America, and potentially globally. Netflix’s move to secure Pay-1 windows from multiple distributors only makes this more likely.
In response, movie theater owners have banded together to try to stop the merger.
I do want to make one thing clear: even with this sale, I don’t think theaters will ever fully “die”. People enjoy watching things (new movies, old movies, concerts, what have you) in the same room as other people. I don’t have specific scientific evidence as to why—be it the size of the screens, communal experiences enhance the experience, or the lack of phones—but people love theaters. Even if Netflix gobbles up Warner Bros. and refuses to send more movies to theaters, something will fill the void, be it legacy screenings, indie films, new distributors (fingers crossed) and so on, which might help keep (some) of these buildings open. But even if theaters don’t “die”, the number of screens and theaters would severely shrink, and small exhibitors will go out of business.
Ah, the cynic might say, kids don’t go to the movies anymore! Not really…41% of Gen-Zers went to the theater six times in 2025! Young people like going to the movies!
Netflix in particular retains their obstinate aversion to…making money. They sent the Stranger Things final episode to theaters and, damn, it did well! Like $20 million! (Anecdotally, many, many people I know said they would have gone if the run had a longer engagement.) They sent KPop Demon Hunters to theaters and the same little kids who spent all summer watching it on their TVs still wanted to go and sing and dance in theaters with other little kids.
You’d think Netflix would want to keep embracing experiences and revenue like this, right?
If anything, this just proves that, instead of theaters being a competitor to streaming (which has been Netflix’s argument for years), it’s a value add. Netflix would do better to try to innovate (like sending more TV show finales to theaters or advertising theatrical films on Netflix) instead of obstinately refusing to ever send anything to theaters.
State of the Box Office 2025 and 2026
Let’s look at last year at the box office and the year ahead. Here’s a recap of 2025, using my two favorite sources for box office data, The-Numbers and FranchiseRe. Starting with David Gross of FranchiseRe:
Next, here’s The-Numbers 2025 recap:
Looking ahead, Cinelytic Group predicts that the US box office will hit $9.5 billion. The-Numbers is projecting $9.6 billion.
Do I buy these estimates? For now, yeah! There’s a lot of big, big movies coming out in the year ahead, as Scott Mendelson’s roadmap for the year ahead deftly shows. Now, interestingly, if you take these estimates as the “over/under” betting line, the market has gone under each of the last two years. That doesn’t necessarily mean this year will go over, but at some point, we’ll underestimate the box office’s abilities, and this year’s lineup seems particularly strong.
Cord-Cutting: Shockingly Good News for the Cable Bundle? And Bad News for Streaming Customers…
Just like the theaters section, there’s good news and bad news for the cable bundle…
We’re just getting started with this issue, but the rest is for paid subscribers of the Entertainment Strategy Guy, so if you’d like to find out…
- The cable business’s shocking turn in 2025
- The key driver for this ($$$)
- Why I don’t buy a key narrative about layoffs in Hollywood
- Two big court cases over piracy
- And a whole lot more..
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