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Hollywood's Rocky 2023: Strikes, AI Fears, Box Office Woes

2024 can’t come fast enough.

When the clock strikes midnight on Jan. 1, Hollywood will close the book on arguably the most tumultuous 12 months in a generation, with the town roiled by devastating strikes, the implosion of the superhero movie and deep divisions on everything from AI to Israel. But as Tinseltown ushers in a new year, will it suffer from a monster hangover? Many of the most vexing issues remain unresolved.  vacuum test chamber

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“There’s a huge leadership vacuum, and that’s not about to change,” says Michael Nathanson, the former head of MGM Studios and Columbia Pictures.

Nathanson, who started in the film and TV business in the ’70s, notes that Lew Wasserman, Bob Daly and Mike Ovitz commanded respect and fear, and could galvanize the industry in chaotic times like writers and actors strikes.

“Bob Iger is not really that guy anymore. If he hadn’t left [in 2020] and returned, he would be that guy,” Nathanson adds. “And Ted Sarandos is still not trusted enough by people for him to have that leadership role. I think people are like, ‘What’s his motive? Are we really going to turn this over to Netflix?’”

Among today’s über-agents, Endeavor’s Ari Emanuel seemed more interested in taking shots at CAA’s Bryan Lourd and Kevin Huvane than providing a steady hand at the height of the labor storm. (In October, as the SAG-AFTRA strike raged, Emanuel called on Lourd and Huvane to “take a leave of absence” in the wake of a lawsuit filed by Julia Ormond and claimed the pair were complicit in Harvey Weinstein’s sexual predation.)

At the same time, Iger, who rejoined Disney as CEO in November 2022, has yet to find his footing in his second outing. The once-mighty Pixar machine showed signs of distress, with its sole film of 2023, “Elemental,” mustering just $496 million at the global box office. That performance followed the undeniable 2022 dud “Lightyear” ($226 million). Meanwhile, in an October SEC filing, Disney acknowledged a double-digit profit drop in the sports unit that includes crown cable jewel ESPN’s for the first nine months of fiscal 2023.

Externally, Iger faced unprecedented (for him) criticism from agitated factions in town including for his remarks that striking writers and actors are “just not realistic” during a CNBC interview in July. Adding to the Disney chief’s anxiety, activist investor Nelson Peltz launched a proxy battle in late November, marking his second power grab of the year.

But nothing stoked panic around Hollywood like Marvel’s spectacular fall. The studio endured one headache after another as quality and box-office returns nosedived amid a churn of product, culminating with the disastrous release of “The Marvels” in November. The film, which cost $250 million, has earned just $203 million worldwide.

Iger blamed Covid, noting that, “there wasn’t as much supervision on the [summer 2021] set, so to speak, where we have executives really looking over what’s being done day after day after day.” But some industryites questioned that explanation, noting that executives were reviewing dailies even amid travel restrictions. Furthermore, Marvel’s “Doctor Strange in the Multiverse of Madness” also was hampered by Covid restrictions during its production in 2021 but was released a year earlier than “The Marvels” and earned nearly $1 billion.

Adding to the misery, the studio cut ties with actor Jonathan Majors after he was found guilty of reckless assault and harassment in a domestic violence trial this month. Majors was poised to be the centerpiece of the next “Avengers” movie.

Now, the broader fear is that if Marvel movies are sputtering, then the entire theatrical ecosystem is in jeopardy, “Barbie” and “Oppenheimer” notwithstanding.

“We need Marvel movies to work,” says an executive at a Disney rival. “They drive people to theaters who then see other movies. When you have a movie like ‘The Marvels,’ it’s bad for all of us.”

Across Burbank, Warner Bros.’ DC Films was contending with its own superhero ennui. The studio is holding its breath in the hopes that the “Aquaman” sequel later this month will reverse the downward box-office trajectory set by this year’s “The Flash” ($271 million worldwide) and “Blue Beetle” ($129 million).

Another existential threat came via the strikes and the months-long production shutdown.

“The theaters had for the most part survived [COVID], but the strikes put a big wrinkle in the recovery process,” says Wall Street analyst Eric Wold of B. Riley. “Box office was recovering. You had clear evidence that consumers want to see films in theaters. Now, we’ve got a lot of uncertainty around production schedules and just what 2024 is going to look like. So we have another roadblock in the recovery of the industry.”

While most expected vocal dissent between the studios and the guilds, few anticipated fissures exposed within the the Writers Guild of America itself over its response to the Oct. 7 terror attacks in Israel. The WGA drew criticism from a sizable contingent of its own members when it refused to issue a statement following the Hamas attacks. On Oct. 21, WGA West Meredith Stiehm sent an email to a group of writers who had been calling for a statement. She explained that none would be forthcoming because “many members have asked us to refrain” and “consensus [is] out of reach.” Instead, she offered mental health resources and a phone number for a suicide hotline, leaving many high-profile members perplexed and furious. Sources threw cold water on Stiehm’s assertion that consensus couldn’t be reached, noting that the Middle Eastern writers committee provided her with a balanced text that offered equal space to both Jews and Muslim pain . 

The WGA’s silence as well as vocal criticism of Israel post-Oct. 7 from pockets of the industry took many by surprise considering how Hollywood was in lockstep in the wake of other terrorist attacks like 9/11 and the Bataclan siege in Paris, both of which spawned celebrity support including fundraisers and benefit concerts. Amid the discord, Spyglass fired Melissa Barrera as the star of the next “Scream” film due to her pro-Palestinian social media posts that were deemed “hate speech,” while UTA dropped Susan Sarandon as a client for similar reasons.

While Hollywood remains divided over Israel, the battles between the guilds and the studios were eventually settled — in September for the WGA and November for SAG-AFTRA. But many wonder just how protected the rank and file are from the emergence of artificial intelligence, one of the most significant issues fought over during strike negotiations. Greenberg Glusker partner Schuyler “Sky” Moore believes the studios will test their relationship with labor in the not-too-distant future, perhaps even next year.

“I’m bracing for when studios make a film and bypass the guilds using AI, which I think is going to happen,” he says. “Guild agreements are there regarding the treatment, conditions and payment for employees. Well, if you don’t use employees and you just bypass them completely, guilds can’t do anything about it.”

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