On today’s episode of the Daily Variety podcast, Naveen Sarma, managing director and head of U.S. media and communications at S&P Global, unpacks the latest report on trends in the media and entertainment sector for the second half of the year. Sarma has some good news and some worrying news for Hollywood and related businesses.
Sarma said the entertainment industry still enjoys fundamental strength from pure demand for content. The challenge for producers is finding new ways to squeeze profits out of TV shows and movies.
“The problem is there are only 24 hours in a day, so it’s becoming even more fragmented. The model that worked so well and made money for Hollywood was to create content and monetize it across what’s called a matrix: multiple territories and multiple platforms. That hasn’t been fixed with the start of streaming,” Sarma says. “Certainly, their content is being monetized around the world, but the issue of multiple platforms to broadcast it on TV, show it in theaters, sell it to multiple media companies is still unresolved. So there is still a problem in terms of profitability.
“And if you look at the big media companies in the U.S. in particular, while they’re becoming more profitable on the streaming side, they’re still facing an overall decline in linear TV,” Salma said. “So linear TV needs to stabilize or disappear and streaming profitability needs to take hold or break out of that trend before media companies’ margins can really start to improve.”
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