The world of video is changing very rapidly.

Over the past couple years, we covered the path of Hollywood. Historically, this is the epitome of content creation. When it comes to films and television shows, nothing rivaled the Los Angeles area.

As stated repeatedly, we are seeing a force of technology working its magic. If one is attuned to how technological disruption works, it was easy to see this one coming.

What is difficult is to judge the timing of it and how fast things go once it starts. Often the initial thrust is takes longer than expected. As for the pace as it kicks off, this depends upon a number of variables. Counter measures are often taken which can fend things off for a while.

Then we have Hollywood which seems to have taken measures that only accelerate the process.

Hollywood's Death Is Opportunity

The headline above says it all.

Los Angeles, the epicenter for recorded entertainment is becoming a production graveyard.

Why is this happening? We are more than a year passed the end of the strikes which we were told we a major win for those represented. Hollywood was going to explode now that workers got their due.

Unfortunately, the opposite happened.

The fragmentation, another word for decentralization, is upon us. This is noticeable as soon as one looks around. We see this from both a geographical and distribution standpoint.

We are now hearing talk that California is loosing business because of the fact that other entities off tax incentives. Los Angeles says this has to be met.

While this could be a part of it, we see the point completely missed.

Notice the subheading: it mentions fewer restrictions.

This is part of the problem. Most government bureaucrats do not realize that regulation means money. While some is necessary, when areas go crazy with it, like California has done, it becomes impossible to navigate. Even leaving the financial aspect aside for a moment, we often see regulations that conflict with each other.

In other words, one might be complying with a state law while breaking a local ordinance.

So what happens? Things move.

Enter Australia, which has aggressively been courting the production to relocate. It was a tempting proposition. The burgeoning film hub, unlike California, allows unscripted programming to receive tax credits to shoot there. Still, the math didn’t make sense, at least not until permitting issues with MasterChef’s L.A. soundstage emerged that would require major renovations. So, starting next year, producers will fly dozens of home cooks — and the troves of cash that come with a big-budget network production — to shoot in Australia.

Here is what things look like:

In three years, this went from around 7,500 to about 3,000. That is a significant drop.

How does this affect things?

Other data suggests that L.A.’s share of the film and TV economy is shrinking, though it remains at the front of the pack. The region posted a 27 percent share of employment in the sector in 2023 — an indication of its portion of domestic production — compared with 35 percent just the year before, per an Otis College report. Californians now account for less than 30 percent of the business’ workers, down 10 percent from a decade ago, according to the U.S. Bureau of Labor Statistics.

Source

Jobs are lost in the area. In one year, the share of employment in the industry went from 35% to 27%.

Of course, this is pre-AI.

The AI Boom

Many still doubt this but those with their heads up in the industry are catching on.

AI is going to crush a significant part of the employment. A contract is not going to protect these people. Actually, many are losing out already even before AI really penetrates.

Generative AI is extremely deflationary. We have yet to see video AI other than in its embryotic state. However, this is going to open up huge opportunities down the road.

In other words, the future of the majority of recorded entertainment will be done by software. There will be some human intervention in some areas but it will continually dwindle. Keep in mind that we have not seen the elbow of the exponential curve yet when it comes to this technology.

That likely starts in 2025.

We are already seeing the studios, who foolishly went all in on streaming, under financial duress. Their legacy assets are being written down as Wall Street realizes they are basically worthless.

AI is going to bring in the era of personalized entertainment.

This is an opportunity for those who are getting ahead of the curve.

Web 3.0 Opportunity

Web 3.0 is growing. The talk of blockchain, especially within the context of AI, is expanding.

The result is we are seeing more resources driven into this industry. While cryptocurrency still garners most of the attention, many developers and entrepreneurs are starting to understand the connection between blockchain and AI.

As we move deeper into the Agentic Internet, the fragmentation of everything (potentially) becomes clear.

Here is where we have a choice. Do we support the Big Tech players or focus our attention (and data) elsewhere?

This is exemplified by entertainment. Are we going to keep turning to YouTube, X, and Meta to get our video fix? For the moment, it looks like this will be the case yet that could change.

Disruption always comes from the outside.

With Hollywood, the embracing of AI is starting. Studios are going to replace people with software. That, however, will not save their bacon.

The challenge that Hollywood studios have is there will be tens of thousands of competitors. People are going to, at some point, produce video on scale like we never saw. This is going to tie into the new distribution models, putting the old theater system mostly out to pasture.

Again, some of the relics from the past will hand around. That said, they will be contracted.

We are entering a world where we are going to have thousands of networks. This is where people will get their information, entertainment, news, communication, and income.

The digital is really starting to eat the physical. As the former expands, more pressure is put upon those who operated in the latter.

Hollywood is a prime example of this.

Of course, this is a major opportunity for thousands of people around the world.

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