In Hollywood, Big Tech is the one ‘Breaking Bad’

LAST week, Hollywood’s woes claimed a local casualty: the Singapore operations of Disney’s Lucasfilm. The studio will shutter after nearly 20 years, a long-distance reverberation of larger problems back in Tinseltown. But even as writers and actors go on strike against The Mouse and its fellow studios, it is Big Tech that has moved the industry’s cheese and threatens to swallow it whole.

It is a tale as old as Old Media. For decades, Big Tech rampaged through newspapers, record companies and bookstores, upending business models and distorting markets with its bottomless pockets and disregard for bottom lines.

Now, it has come for Hollywood and the incumbents are outgunned. For starters, it is hard to win a fight if battle lines are poorly drawn. Netflix might be aligned with traditional studios in the ongoing union strikes, but it is as much Big Tech as its brethren who have muscled into media – Apple and Amazon. Its core offering isn’t Orange Is the New Black, but its streaming plumbing that has snaked into devices everywhere.

Of course, traditional studios have built their own digital plumbing such as Disney+, Max and Paramount+, but they’ve been backed into playing a game on an uneven field. Unlike the tech titans, Old Media is contending with other shrinking parts of their empire, such as cable TV and advertising.

Compounding this, Big Tech’s unrelenting spending on original content has kept costs high for everyone, even though expectations of traditional media and tech differ dramatically. A Netflix or Amazon investor might tolerate high cash burn in return for greater growth, but Disney’s investors less so.

Also, content might be king for the incumbent studios, but it is a sideshow for Apple and Amazon, which mint money elsewhere in their core businesses. Some have estimated that Apple TV+ brings in just 2 per cent of Apple’s services revenue. A big war-chest coupled with low stakes make for a comically lopsided content fight in the Streaming Wars.

Compounding matters, both sides are battling each other as well as the rest of Big Tech. ByteDance’s TikTok videos, Microsoft’s Xbox games and Google’s YouTube content are formidable contenders for eyeballs. Big Tech is also carting its latest trojan horse, artificial intelligence (AI), into the war with studios. The technology threatens to redefine content altogether, even as it hoovers up existing Hollywood material as learning fodder.

“The real threat is not studios using AI, but studios being replaced by AI,” Scott Galloway, professor of marketing at New York University, wrote in a blog post last month. Galloway reckons that studios and creatives ought to be teaming up against AI companies instead of fighting each other.

This is sensible but unlikely to happen in a media sector that insists on bringing yesterday’s knife to today’s gunfight. What is likelier is that Big Tech will keep acquiring and innovating its way to more eyeballs until, finally, Hollywood morphs into Silicon Valley and the two are indistinguishable.

This is already beginning to happen, with Amazon buying film studio MGM last year and speculation rife about Apple buying Disney’s ESPN. How the strikes will end is unclear and perhaps not particularly meaningful. For as any horror movie buff will tell you, with Old Hollywood increasingly ceding ground to Big Tech, the calls will be coming from inside the house.