A massive sinkhole recently opened up on Sunset Boulevard at Holloway Drive, just down the street from the heart of Hollywood itself. It’s a fitting metaphor for the financial and creative sinkhole that’s busy hollowing out the entertainment industry. “There’s sheer panic in the ranks. And it’s only going to get worse,” a longtime representative at a major talent agency told me. “We talk about it on an internal Signal chat at work. We can’t even believe how bad things are.”

A lot is going wrong all at once, and a huge transition is not-so-quietly under way

A lot is going wrong all at once, and a huge transition is not-so-quietly under way

“The meteor has hit and the dinosaurs don’t know it yet,” according to a director and producer who has spent two decades making movies in Hollywood. But if you read the industry’s own reporting, Hollywood’s on a roll. After a rough few years since the pandemic and the various writers’ strikes, the box office is booming again. Popcorn is popping. Gen Z butts are seated. This month’s Variety cover story trumpeted the happy news: “Hollywood claws back!”

And some of the numbers back up the public ebullience. Thanks to a handful of surprise indie hits and expensive tentpole films that managed not to flop, analysts think 2026 box office receipts will top $10 billion (2025 ended with $8.6 billion).

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This year is already filled with features that punched way above their weight. The Devil Wears Prada 2 grossed $688 million, a rare achievement for a female-driven comedy (it wasn’t actually funny, but that’s another story). Super Mario Galaxy was the year’s first billion-dollar baby. Toy Story 5 has made $900 million so far and there are no signs of franchise fatigue for the 30-year-old property (except in the voices of the actors, who have aged considerably).

Project Hail Mary earned almost $700 million globally, was beloved by audiences of all ages and is Amazon MGM Studios’ first major smash. Michael, which seemed doomed to be a disaster after multiple reshoots and its problematic subject matter, Michael Jackson, thrilled audiences and earned another billion for the business. Obsession, a Gen Z dating horror movie made by a YouTuber for $750,000, has made an eye-popping $430 million. Backrooms, which is based on a meme series, became indie studio A24’s biggest hit of all time, beating Marty Supreme and taking $363 million.

And hate it or love it, Christopher Nolan’s dour, race-swapped, modernized, feminized and Emily Wilson-sanitized The Odyssey is the talk of the town. Everyone and their mother is going to end up seeing it, if only to join in the cultural conversation. It’s a rare theatrical event that has already become a worldwide phenomenon. Of course it is. We are all trapped in a cave watching whatever shadow dance Hollywood chooses to project on the walls. It is firmly in control of nearly every single piece of English-language, scripted, longform filmed movie or television available to American audiences. It wields this power virtually without competition or opponent. If you want to see a movie made in English, you are going to watch a product of the Hollywood machine.

Last year, just three studios – Warner Bros. Discovery, Disney and Universal – accounted for nearly 70 percent of domestic box office takings. Hollywood’s share of what Americans actually watch is around 95 percent plus in theaters (by revenue) and 85 to 95 percent in streaming viewing time. They own your butt and your eyeballs and that’s not changing anytime soon. But behind the rosy headlines and inside the plush boardrooms in Beverly Hills and Century City and Burbank, the hope of 2026 looks more like cope. A lot is going wrong all at once, and a huge transition is not-so-quietly under way.

The agent did not mince words. “Streaming has ruined the business. It’s the reason Shari Redstone sold Paramount for peanuts. It’s why Warner Bros. was forced to sell. It’s why Comcast is looking to exit streaming.”

Netflix reported its second-quarter earnings and its stock price sank 11 percent. It’s down 40 percent over the year. Why? Because people who watch Netflix shows when they first air are not returning for the second season. Can anyone name a Netflix show they love right now? They’re not hitting. And there are no more lucrative linear TV cable markets and syndication dollars to keep things afloat. Meanwhile, Netflix’s subscriber base has plateaued. It was forced to add a subscription tier that lets users skip ads, which it said it would never do. And it keeps raising prices.

This has led to fewer movies being made overall. Twenty years ago there would be a few huge event movies and a few quirky indies per year, but the bulk of the moviemaking was mid-tier talkers, mid-budget dramas, rom-coms and comedies. Those have virtually vanished. All the studio eggs are now in the baskets of the few event films and handful of indies they pin their hopes on at film festivals.

Netflix is not alone in........

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