Growing Globalization of Production Spells Trouble for Hollywood

With another strike likely averted and Hollywood crews holding onto hope that work is finally about to bounce back, the ominous question hanging over the first half of 2024 persists: Is the post-peak TV valley just that — a valley in between peaks — or is it something more permanent? Will the business, can the business, ever return to peak levels?

It’s a question not easily answered, but if current trends are any indication, a shrinking of the U.S. entertainment industry — not unlike what befell the country’s auto and manufacturing industries — may well be imminent, as film and TV production goes increasingly global at the expense of stateside work. 

A much-reported study released by Ampere Analysis last week, for instance, found that Netflix and Amazon have “returned to dominance” in original title commissions among streamers, accounting for just over half of all SVOD content orders in Q1 as their rivals cut back on spending.

And far more than half of those titles will come from international territories, with non-U.S. TV shows and movies making up around 70% of both Netflix and Amazon’s original content commissions in Q1. 

Yet while many outlets reported on the study, few noted the implications of this data for Hollywood’s long-term health. When placed in the context of larger trends in the entertainment industry, the data suggests that the globalization of the content business may have already reached a tipping point. 

That globalization has been a long-simmering trend in the entertainment space, of course, particularly since the Korean Netflix release “Squid Game” took the world by storm in 2021. But while few international titles have broken out on anything close to the same level since then, Netflix in particular has been investing more heavily in localized original content, with titles produced by and for a particular international market. 

Indeed, Ampere reported earlier this year that Netflix’s overseas content spending is set to surpass its domestic budget for the first time in 2024. Meanwhile, the streamer itself is proudly highlighting its growing content investments in regions including Southeast Asia and has steadily increased its annual rollout of non-English-language series over the past several years, according to Luminate Film & TV data. 

Luminate’s figures also indicate nearly half of Netflix’s TV output in the first half of 2024 was made up of international titles (80 out of 172 unique series released). The strikes partly account for this, of course, as there were fewer U.S. series to release this year due to 2023’s lengthy production shutdown, which did not impact overseas filming. 

But when coupled with Ampere’s new study, Luminate’s data begin to look a bit more ominous. How can Netflix’s U.S.-based production rebound when more and more of the streamer’s content spending — which, it should be noted, has been growing more flat overall — is going toward overseas production? 

Moreover, how can U.S. production in general resurge when the two biggest commissioners of streaming content order increasingly more international titles while their competitors commission fewer titles overall? Disney, generally considered the strongest of the legacy media companies, ordered just 51 streaming shows and movies in Q1 2024, per Ampere data — its second-lowest figure since Q2 2020, the early days of the COVID lockdown — versus Netflix’s 215 and Amazon’s 140.

If current trends hold, in other words, Hollywood could be faced with a prolonged work drought while the biggest content providers shift their spending to markets where production and labor are cheaper and less regulated. Any of this sounding familiar?

Much as it hurts to say, those Hollywood crews waiting for a resurgence in work may be waiting a very long time.