We have detailed over the past year the woes of Hollywood. This is a fascinating situation since we are witnessing the disruption of a long time industry happening in real time.

It is only going to get worse for the "movie capital" of the world. Wherever we look, there is fragmentation.

Even the introduction of shorts on LEO is another simple mechanism to take eyeballs away from the traditional. With only so many hours in a day, when platforms are starting to garner those hours, they have to come from somewhere.

Of course, YouTube and TikTok are the biggest culprits on this end. However, smaller platforms that spring up start to pull even more away.

Now there is a major animal that is about to really stick it to Hollywood. This is something that epitomizes the idea of fragmentation.

Hollywood Woes Compounding

The above is a headline from CNBC.

We saw a couple of blockbuster films this Summer, something that Hollywood badly needed. However, the good news was offset by the breakdown of where the revenues came from.

Walt Disney Co.’s latest film, “Deadpool & Wolverine,” has taken the world by storm since its release on July 22, becoming the highest-grossing R-rated film of aLL time. But it has failed to replicate that success among Chinese moviegoers.

While the Marvel superhero sequel made a respectable $57 million in its first 20 days in China, a locally produced comedy-drama, “Successor,” made six times as much in the time period, according to data from maoyan.com.

This shows how things are changing in China. It was once fertile ground for Hollywood, with the Chinese loving American films. That is no longer the case.

Released on July 16, “Successor” continues to thrive in Chinese theaters. As of Monday, it had grossed over $439 million to cement itself as China’s third most-watched movie of the year. “Deadpool & Wolverine” languishes at number 15.

After a good start, the Disney production is sucking wind. It is coming in at 15th in one of the largest markets in the world is not a good sign.

This is compounded when you consider this is a mega-hit.

market Share

Hollywood studios are in trouble. There is no way to sugarcoat this.

Losing China to the domestic producers would simply be another nail in the coffin of an industry already struggling. Two long time studios already were bought out, with a third looking like it might be on the block. Disney is still the strongest of the lot but they are showing some signs of weakness.

When it comes to China, market share is the name of the game. While it is a country with its problems, it is still the second largest economy in the world. The middle class is bigger than the entire United State population, a fact often overlooked.

The reality is Hollywood no longer enjoys its monopoly. This is what disruption does. It takes what was considered rock solid and breaks it apart.

Hollywood is feeling the effect and things, in my view, are just getting started. Fragmentation is going to take on an entirely new meaning when new entrants enter the market. This is going to be entities of varying size. The problem is that, over the next couple years, the barrier to entry will fall.

AI is going to be the name of the game. It was only a couple years ago where people swore it would never be able to be creative. At this moment, many believe that is the first thing it will disrupt.

On this one, I tend to agree.

This is what decline looks like. Disney was the king because they were not completely dependent on the movie/television division. Their parks and resorts provided a strong buffer.

It seems this is also the future of the industry. The benefit to an Amazon, who bought out MGM, they have many different ways that revenue is generated. MGM is almost a built in unit to their subscription model.

Another couple years of struggle will do in some of these studios. Paramount is not going to be the last one on life support.

Posted Using InLeo Alpha