5 Provocative 2024 Hollywood Predictions From Wall Street Experts

2023 is in the books, and it brought Hollywood a range of old and new challenges. The writers and actors strikes will keep having an impact on the film slate and, as a result, on companies’ financials in the new year. And deal chatter across Wall Street and Hollywood is likely to persist. AI and its impact on and implications for doing business is also expected to keep being a hot topic of debate.

And advertising market clouds, cord cutting, and progress toward are expected to be on entertainment industry executives’ minds. But 2024 could, of course, also have surprises up its sleeve. With that in mind, looked through predictions by analysts and other experts to identify some of the more provocative forecasts for the new year.

Peter Csathy, chairman of advisory firm Creative Media, focused on short form video service TikTok and its growth outlook after to ban the Chinese owned app. “Our collective obsession with TikTok will only deepen, even as Congress continues to threaten to pull the plug,” he suggested in a report.

“The courts will strike down Montana like ‘shut it all down’ laws, and younger voters will rebel against any serious ‘teeth.’ The social media star’s increasing dominance of our attention, not to mention its increasing focus on longer form content, will also begin to eat into our ‘Netflix and chill’ time, and the streaming giant will feel the pain.” At the same, “streaming content budgets will continue to fall back to Earth due to basic business realities of costs outpacing revenues,” predicts Csathy.

“Expect all major streamers, including Netflix, to do more with less content. Gone are the days of continuous billion dollar content budget increases.” In what he called the “Barbie Effect,” the expert sees “major streamers smartly focus more on evergreen, ever reprogrammable franchise content.” Csathy said Walt Disney is “the gold standard here with its Marvel, Pixar, , and Disney Princesses brands,” among others.

“But tech first streamers like Netflix will also begin to quietly experiment with AI to further cut costs and generate new content with better economics.” With media mega merger chatter all the rage on Wall Street these days, some predict big moves in 2024 that will reconfigure the Hollywood landscape.

But at least one outspoken analyst is pouring cold water on such expectations. “Many investors believe consolidation is the answer to legacy media’s streaming woes,” LightShed Partners’ Rich Greenfield wrote in a recent report. “We disagree.” His bearish explanation: “Legacy media companies are simply too late and not equipped talent wise or strategy wise to build scaled global streaming services on top of the growing headwinds facing their linear TV assets.” And, amid talk about possible deals involving the likes of Paramount Global, Warner Bros.

Discovery and Comcast/NBCUniversal, he warned: “Layering on even more linear TV assets to any of these legacy media companies feels like a financial death sentence.” Greenfield argued that regulatory approval “would also appear challenging” for new media mega deals. “We doubt anyone is going to attempt a major transaction in 2024 in the midst of a Presidential election and with the current administration hostile toward consolidation,” he wrote.

“If legacy media M&A is even possible in the next administration, your are looking at announcing a deal in 2025 that would not close until 2026. Legacy media companies simply do not have time to wait and hope for M&A as a strategy.” Greenfield concluded with a warning: “They must take action to alter their streaming strategies immediately or their stocks will continue to suffer.” Kenneth Leon, analyst and research director at CFRA Research, in his forecast for the new year predicted diverging fates for the biggest streamers and the rest of the pack.

“The top tier group, including Google’s YouTube TV, Amazon Prime Video, TikTok TV, Netflix, and Disney+ with ESPN and Hulu, is likely to gain market share from viewers and advertisers,” he suggested. “The second tier group (based on total subscribers) may find it more challenging to reach positive earnings before interest, taxes, depreciation and amortization (EBITDA) and profitability.

This group includes Comcast’s Peacock, Paramount+, Warner Bros. Discovery’s Max (formerly HBO and Discovery+) and other small providers.” Leon doesn’t see much room for further price increases in 2024 amid growth in lower priced advertising tiers and free options. “We think it will be difficult to raise subscription pricing after many providers already did so in 2023,” he argued.

“Pay free plans will continue to command the higher average revenue per user (ARPU) from subscribers, while ad pay and free advertising streaming (FAST) are gaining for households that are budget minded.” The analyst argued that “linear networks with advertising and affiliate license revenues can be viewed as mature cash cows to subsidize video streaming operations still in the red,” predicting that “second tier players that offer both linear and streaming will continue to communicate about these areas as complementary businesses” to investors and consumers.

Leon also warned that “innovative emerging media companies may be under pressure to achieve positive EBITDA and profitability” in the new year. His prediction: “2024 may be the tipping point for Roku and Spotify to show their growth strategy can be done while making money.” That is one 2024 forecast made by Mark Mulligan, music industry analyst at market intelligence firm MIDiA Research and his colleagues.

“This is our headline prediction and one that we think will have far reaching impact across all forms of entertainment,” they wrote. After all, streaming and social media platforms have so far proudly touted their ability to offer up content consumers really want and like. “Algorithms on large scale platforms once super served users, encouraging them ever closer to their respective niches,” the experts explained.

“Now, algorithms are increasingly pushing users to the content that supports platform monetization priorities over user priorities.” As an example, Mulligan mentioned X’s shift in the use of recommendation algorithms “to surface views that are intended to provoke response from users.” For video streamers, there are many reasons why algorithms can focus on platform rather than user centric objectives.

For one, “Netflix has added financial incentive to drive viewership of its originals over shows licensed from partners,” he told . “Music streamers [which have little original content] on the other hand have other priorities. For example, Spotify’s ‘Discovery Mode’ service for labels gives them higher priority in recommendation algorithms in return for a reduced royalty rate.” The result: “Users end up feeling that the algorithm is not listening to them anymore,” warned Mulligan and his team.

“This trend will accentuate in 2024 among the world’s biggest consumer platforms, resulting in user dissatisfaction and creating a window of opportunity for new, user need focused platforms, starting the cycle all over again.” Csathy predicted that Congress and regulators “will do their best to control AI’s otherwise unbridled rise by developing guardrails to promote transparency, identify content provenance, and protect against theft of names, image, voice and likeness for profit, some of which will be necessary and sensible.” However, he also noted, that several “may be nonsensical.” As was the case with social media, U.S.

regulation “will follow the EU, which just recently passed sweeping groundbreaking measures to regulate AI,” he suggested. “The push for a national ‘right of publicity’ will gain steam as a result.” Csathy’s expectation: “Ultimately, dollars will decide how this all plays out, since no copyright and content exclusivity (the ability to monetize) comes from AI only generated works, and no one knows how consumers will react to creative works that are increasingly ‘synthetic’.” His conclusion: “Copyright remains the most powerful guardrail bar none.

Dollars matter, and the profit motive is strong, young Skywalker.” Csathy believes that “we can already read the tea leaves of where it’s all heading” based on early legal decisions. His takeaway: “Judges have ruled that even full scale copying of massive numbers of copyrighted works can be acceptable transformative ‘fair uses’.” THR Newsletters Sign up for THR news straight to your inbox every day More from The Hollywood Reporter.