Hollywood Shrinkage of 2025 Will Carry On in 2026

The dust of 2025 is still gritty in our mouths as Hollywood looks ahead to 2026 and wonders: Can it get worse? Will it? 

The answer is – well, yes, it probably will because we are watching the entertainment industry transform in real time. With another 17,000 jobs vaporized last year, with a barely-rescued box office result and with December closing on the looming merger of market-leading Netflix with legacy brand Warner Bros., we can hardly avoid the obvious: Hollywood has changed. 

I’m not the first to point out that a century-old business model has been disrupted, permanently, by the rise of streaming and tech’s takeover of what was once known as Hollywood. And I’m not even talking about Oracle’s Larry Ellison buying Paramount from the Redstone family. Tech companies Netflix, Apple and Amazon now outweigh Disney, NBCU, Paramount and whatever Warner Bros. will be when the sale of that studio shakes out. Google doesn’t even make content, but its YouTube division is still bigger – in revenue and audience – than any competing TV platform. 

Is the consumer better off? That’s up for debate. 

But the vibrant system that created prosperity for a 360-degree ecosystem of movie studios, TV networks, producers, actors, writers, directors, their agents and managers and lawyers, plus an entire web of below-the-line craftspeople and various production experts has receded over the horizon of history. 

It does not mean Hollywood is disappearing. The business of making stories for television and movies continues. But the opportunity for financial success is vastly limited to the studios themselves and a rarified layer of talent, whether that’s the super-writer-producer Taylor Sheridan or a tiny number of stars like Tom Cruise or the “Frozen 3” cast Kristen Bell, Josh Gad and Idina Menzel.

The Hollywood business model has faced shifts wrought by new technologies before. That included adding sound to the movies, the invention of television, the rise of cable and then premium cable, or the advent of DVDs. For those willing to widen the aperture of entertainment, “change” has not always been a harbinger of “worse.” 

As a trend, technological change has generally meant a broadening of entertainment to include new formats and functions, usually with the result of expanded opportunity, revenue and profits. After all, DVDs did not kill theatrical moviegoing, despite the worries at the time. In fact it brought a flood of new consumer spending that floated movie profits for more than two decades. 

But the latest wave of technological change has resulted in something different. Since 2010 or so, the advent of streaming has sparked a disruption not seen before, driving viewers to the all-you-can-eat smorgasbord of online entertainment. With the additional disruption of the COVID lockdown in 2020, the public has grown less willing to go to a movie theater to see a film that will be streaming on their TV just a few weeks later. 

This shift is skewing the entire entertainment industry further toward television, even as “television” has come to exclude broadcast and cable channels. (And by the way “Broadcasting and Cable” has ceased to exist as a publication, I recently learned.)  

I’ve been having this argument with Hollywood corporate executives, both current and retired, as we all survey the wreckage of 2025 and wonder what will come next. My friend Jeff Sagansky – currently a media investor who has run Sony television, CBS Entertainment and NBC – has warned repeatedly that abandoning the cash-rich cable networks, for which programmers stopped providing new content a few years ago, would hasten their extinction. Old contacts reach out from their retirement havens in Hawaii or Portugal and confess how glad they are to have gotten out of Hollywood when they did. Lovers of independent film look around for a saviour and find none. 

Peak TV has unpeaked. Bidding wars at Sundance are mostly distant memories. Who will make the dreams for the dream machine? 

“You can trace the disintegration of Hollywood to Netflix making original series,” one of these executives said to me recently, echoing the complaints of myriad others over the lack of back-end profits. “Look at where we are. It’s all coalescing around three or three-and-a-half companies, that’s it. They’ve all taken their cue from Netflix. They’ve cut back. They own all that’s on the air. No one gets any other participation… They [Netflix] only have 8% of viewing time, but they dictate the roadmap for how the whole industry is functioning.”

What’s worse, he said, “they’ve consistently ratcheted prices to consumer, every year, way above inflation.”

Another executive, recently retired, wondered what happens to TV production if Netflix gets Warner, with its trophies of HBO, Warner Bros. Television and Turner. “A big part of Hollywood companies is TV series production. It hasn’t been movies. So what the f–k will happen with the center of the visual entertainment business – that’s TV shows? What will happen to that?”

All of this doom-telling and I haven’t even mentioned the arrival of AI. That’s because that particular disruption has not yet landed on Hollywood’s shores with two feet. But it certainly will. 

I’ll end on one hopeful note: disruption always means opportunity. So if the entertainment industry has contracted, that in itself has left space for new ideas, fresh products, alternate platforms. I’m looking at you, Creators. 

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