A group of young assistants from WME — the talent agency representing Martin Scorsese and Ben Affleck — were debating their career choices between rounds of bourbon and line dancing on a recent evening at the Desert 5 Spot bar in Hollywood.

“I got into this business because I love movies, but everyone is really worried that the movie business won’t exist anymore,” slurred one of the twentysomethings, who asked not to be identified sharing their thoughts freely.

For almost as long as it’s been around, the film industry has been pronounced dead before its time. The advent of television in the 1950s, the sale of studios to conglomerates in the 1960s, and the rise of video cassettes in the 1980s and streaming in the 2010s were all thought to be the nail in the coffin.

Now, as the Academy of Motion Picture Arts & Sciences prepares to hand out its highest awards to films and filmmakers on Sunday, the industry is once again awash in gloom. Morale has been battered by tens of thousands of layoffs, the exodus of production from California to lower-cost territories, the waning cultural relevance of cinema versus social media, declining attendance at theater chains and fears that artificial intelligence will displace traditional moviemaking.

For employees of Warner Bros. Discovery Inc., which has Sinners and One Battle After Another up for best picture, this year’s Oscar race has been overshadowed by rival Paramount Skydance Corp.’s $110 billion deal to buy the company. It’s the third time Warner Bros. has been sold in less than a decade.

In Sentimental Value, another one of the best picture nominees, Stellan Skarsgard plays an acclaimed Norwegian director whose new film is being made for Netflix Inc. When a reporter asks him if the picture will appear in theaters, Skarsgard’s character says, “Sure, where else?,” at which point his producer jumps up and says: “It’s still being negotiated.”

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Consumers are spending more than ever on entertainment of all sorts, but less gets “filtered down to our members in terms of employment opportunities,” Oppenheimer filmmaker Christopher Nolan, the president of the Directors Guild of America, said at a February press conference. With guild-member employment down 35% to 40%, he called it a “very worrying time for the industry.”

Hollywood’s anxiety — the local industry’s challenges are often compared to the decline of automaking in Detroit — isn’t misplaced. The crisis has grown to such magnitude that last year, California doubled the annual assistance it gives to film and TV productions to $750 million to stop them from fleeing the state.

While that’s succeeded in securing the production of some big-budget films, including a new Jumanji from Sony Group Corp., there’s a bigger issue, as many studios are simply undertaking fewer projects. Studios are spending less on film projects since the actor and writer strikes in 2023, and some media companies are reallocating programming budgets to sports and live events.

ProdPro, an industry data tracker, said in February that sentiment among 850 crew members surveyed about their prospects for 2026 was generally more negative than in recent years, with sound technicians and dolly grips experiencing an average of six months of downtime between productions.

The decline has had a ripple effect on associated businesses. Earlier this year, Goldman Sachs Group Inc. seized the Radford Studio Center, a famed Hollywood lot whose owners defaulted on the mortgage. Arri Group, a camera and lighting supplier, cut jobs and closed two locations in Germany.

Even when films are produced and released in theaters, few draw crowds large enough to keep the industry afloat, let alone thriving. North Americans are going to the movies about half as often as they used to a decade ago, based on the number of tickets sold at cinemas in the US and Canada. At the same time, revenue from international markets such as China, long a cushion for any stateside softness, has become unpredictable, hurt by geopolitical tensions and more competition from local productions.

Those pressures, as well as the impact of pandemic shutdowns, have hurt theater chains including Regal owner Cineworld, Alamo Drafthouse, Ipic, Metropolitan, CMX and Look Dine-In, which all filed for bankruptcy in the past five years. AMC Entertainment Holdings Inc., the world’s largest cinema chain, has lost 99.7% of its value since the stock hit an all-time high in June 2021.

“The bottom line is that the theater business is in a very dark and troubled place, and the reality is you need people that are investing in the entertainment business,” Rich Greenfield, a media analyst at LightShed Partners, said in a recent interview with Bloomberg TV.

David Ellison — Paramount’s chief executive officer and the son of Oracle Corp. Chairman Larry Ellison — is pledging to invest. He’s seeking to release 30 films in cinemas annually from Paramount and Warner Bros. combined once his proposed deal closes.

Netflix Inc., which dropped out of the bidding for Warner Bros. in February, plans to increase its programming budget by about 10% to $20 billion this year.

Netflix, Paramount and others are also experimenting with AI in a way that could empower new kinds of storytelling. Lionsgate Studios Corp. has partnered with startup Runway AI Inc. to lower production costs, and Walt Disney Co. has signed a deal to license its intellectual property to OpenAI Inc., which developed the Sora video creation tool. Netflix is also paying as much as $600 million to acquire InterPositive, the AI moviemaking company founded by Affleck, Bloomberg has reported.

“While we can point to current indicators like job cuts or offshoring, we can also point to exciting developments as new story forms emerge,” Holly Willis, chair of the University of Southern California’s media arts and practice division, said in an interview.

For the cultural relevance of film to survive, the business needs to make inroads with younger, perpetually online generations. They’re used to accessing free content on social media platforms instead of paying for a movie ticket. Encouragingly, recent events and data show that the two are becoming complementary.

In February, Iron Lung, a $3 million film directed by YouTube creator Mark Fischbach, took in $51 million at the box office. Better known as Markiplier, Fischbach urged his followers on social media to see the picture in cinemas.

Starting in 2029, the Oscars will also be streamed globally on YouTube, which the academy hopes will attract new audiences and reinvigorate the ceremony’s popularity after years of declining viewership.

Credit: www.bloomberg.