From Blockbusters to Bust: Why the Film Industry is Fading Fast

The film industry is undergoing a significant transformation marked by shrinking revenues, decreasing output, and changing consumer preferences.

Major studios are consolidating, streaming platforms are struggling to prioritize original films, and television is emerging as a dominant medium. This shift has profound implications for the business and audiences alike.

The Shrinking Presence of Major Studios

From 1995 to 2009, Hollywood’s six major studios—Disney, Warner Bros., Universal, Paramount, 20th Century Fox, and Sony—released an average of 112 theatrical films per year. However, from 2010 to 2023, that number dropped to 83, with the disappearance of Fox under Disney exacerbating the decline.

The number of theatrical tickets sold in the U.S. has fallen by 38% over the past decade, while ticket prices have increased by 33%. This trend points to fewer high-quality films produced by the remaining studios, resulting in a reduced selection for consumers.

Between 2017 and 2019, the worldwide box office consistently hovered around $40 billion annually. However, in 2022 and 2023, it only reached about half that amount, and 2024 is lagging even further behind those already dreary figures.

The Struggles of Theaters Deepens

The exhibition business faces significant risks. Theaters are grappling with over-leveraging and an oversupply of screens. The U.S. alone has around 40,000 screens, yet there is a shortage of consistent, high-quality content to fill them.

Major theater chains like AMC and Regal have faced significant financial challenges, with Regal’s parent company, Cineworld, recently emerging from bankruptcy. AMC, the world’s largest theater company, is struggling with a heavy debt load and has seen its stock price drop by over 90% in the last year. Also, long-time independent film champion Alamo Drafthouse has reportedly considered a sale.

Even before the lockdowns and mandates, theater attendance declined due to changing consumer habits and competition from other entertainment options. The industry’s over-reliance on IMAX studio action tent poles highlights the need for a diverse film slate for theater chains to thrive. This precarious situation makes theater closures and downsizing very likely in 2024.

The Limited Impact of Streaming

Streaming services have not fully compensated for the decline in theatrical releases. While 77% of film libraries worldwide on subscription video-on-demand (SVOD) services consist of theatrical films, original films from major streamers like Netflix account for only a quarter of total film catalog demand.

Netflix, which has historically been a prolific buyer of original content, is significantly reducing its annual output of original English films. This shift suggests that streaming platforms are not prioritizing original films as much as initially anticipated.

FilmTake Away: Challenges and Future Outlook

The film industry is contracting, with fewer major players releasing fewer titles for a shrinking revenue pie. This decline is bad news for the creative community, which will see reduced financial flows.

While theatrical exhibition will continue to exist, its role as the centerpiece of Hollywood is being questioned. The talent migration to television and other formats may become more pronounced as the industry navigates these changes. Despite the challenges, the future of cinema will depend on its ability to adapt and innovate in an increasingly competitive entertainment landscape.

The future of the global box office remains uncertain, with doubts about whether it will return to the $40 billion-plus levels of 2019 and earlier. A clearer picture is expected by 2025, once the impacts of the writers’ and actors’ strikes have subsided.