Hollywood is in trouble.

Attendance at movie theaters is down. The audience for traditional television is melting. Cable television subscribers are cutting the cord. The streaming business is losing billions. Writers and actors are on strike demanding a bigger piece of a shrinking pie.

In the theatrical business, attendance in the U.S. and Canada peaked with 1.57 billion tickets sold in 2002. Attendance drifted downward to 1.3 billion tickets sold in 2019 before falling off a cliff during Covid. Sales of 812 million tickets in 2022 were barely more than half of the 2002 peak.

Thanks to rising ticket prices, box office receipts inched upward at an annual rate of 1% per year from $9.2 billion in 2002 to a peak of $11.9 billion in 2018. Sales through the first half of 2023 were $5 billion.

This lack of box office growth has been compounded by shrunken ancillary revenue. Movies used to have an afterlife of licensing to cable TV, then broadcast TV. Today, movies generally go straight from theaters to streaming.

From the questionable appeal of the movies themselves to outrageous concession prices to interminable pre-show advertising to rude behavior in the audience, the movie-going experience deteriorates even as ticket prices go up. Charging more for a worsening experience is no way to prosper.

Meanwhile, “linear” television — which was once an oligopoly dominated by ABC, NBC and CBS — is a melting ice cube. According to Statista, ad revenue peaked at $72 billion in 2018 before falling to an estimated $61 billion this year. This is partly a reflection of the accelerating fall-off in cable TV subscribers from 103 million households in 2013 to 63.4 million late last year. As subscribers go, so do the licensing fees paid to the broadcasters.

Where have all the viewers gone? The Nielsen Co. estimates that streaming comprises 27% of total viewing time. That sounds OK — except that almost every studio in the streaming business not named Netflix loses billions of dollars per year.

Faced with stagnant theatrical revenue, plunging linear revenue and billion-dollar streaming losses, it’s obvious that something has to give.

That’s where the striking actors and writers come in. With the pie is shrinking, the “creatives” are terrified that they will be replaced by Artificial Intelligence and digitization. Moreover, creatives are justifiably aggrieved over the outsized pay packages of studio suits such as Disney CEO Robert Iger who just signed on for another two years at $27 million per year. True, Iger presides over much more than a movie studio but still. What goes unmentioned are equally lavish sums such as the $25 million paid to Harrison Ford for an apparent money-loser “Indiana Jones and the Dial of Destiny.”

So what’s the answer? In the long run, studios need to turn out products that more people will pay to see. In the short run, Barry Diller, former chairman of Paramount and 20th Century Fox, suggests that studio heads and big stars jointly agree to take 25% pay cuts to “narrow the difference between those who get highly paid and those that don’t.”

Without a quick settlement and production of new content, Diller fears that customers will flee in droves, never to return.

Jeffrey Scharf welcomes your comments. Contact him at jeffreyrscharf@gmail.com.