Lower Costs Are the Name of the Game

It was another recovery year for Hollywood following the dual strikes that affected the film pipeline just a few years after the COVID pandemic hit. The global box office dropped 10 percent to $30.5 billion last year but it wasn’t bad news for everyone. In a mixed year for the industry, the film divisions of some legacy entertainment conglomerates actually posted profit growth for the calendar year 2024, while others recorded drops.

The Hollywood Reporter‘s annual studio profit report includes an educative look at Disney, even though it doesn’t report figures for its filmed entertainment operations. (THR is instead looking at its “content sales/licensing and other” financials).

Also keep in mind that financial disclosures for Hollywood studios remain limited and are not easily comparable. (For instance, Sony’s pictures segment includes TV networks.) THR crunched figures for the calendar years 2024 and 2023, even though Disney and Sony have fiscal years that don’t align with the calendar year, and their executive teams manage their businesses with an eye on the fiscal year.

Also included is a look at Netflix whose financials are not directly comparable to those of the studio units of entertainment conglomerates. For example, most of Netflix’s revenue comes from subscribers that Hollywood giants typically record outside their studio units. With all that noted for context, here’s a closer look at the bottom line of the film businesses of Hollywood giants last year.

Warner Bros. Discovery

Profit: $1.7B -23% year-over-year
Revenue: $11.6B -5% year-over-year

Warner Bros. Discovery missed the blockbuster buzz of Barbie and gaming success in 2024, which led its total studios unit revenue and profit to drop. The studio’s biggest box office hits of the year were Dune: Part Two (whose global theatrical revenue has reached around $715 million to-date), Godzilla x Kong: The New Empire ($572 million), and Beetlejuice Beetlejuice ($450 million) but it posted a 4 percent drop in theatrical revenue. Plus, a 53 percent decrease in games revenue was driven by weaker results after the strong performance of the 2023 slate, led by Hogwarts: Legacy.

“This was a real outlier to the negative after maybe a bit of an outlier on the positive in 2023,” said WBD CFO Gunnar Wiedenfels on an earnings conference call. However, WBD’s studios costs dropped minimally, and it touted its TV studio’s 2024 contribution, saying it “reclaimed its position as the industry’s number 1 supplier of live-action TV,” highlighting such hits as Max’s The Penguin, Apple TV+’s Presumed Innocent, and CBS’ Georgie & Mandy’s First Marriage. That all added up to a 9 percent increase in TV product revenue.

Home entertainment revenue also increased due to the performance of Dune: Part Two, Godzilla x Kong: The New Empire, Wonka, Aquaman 2 and Beetlejuice Beetlejuice and higher catalog sales. And “other revenue” rose 9 percent, “primarily attributable to the opening of Warner Bros. Studio Tour Tokyo in June 2023,” the company said. No surprise then that management is focused on improving results in the more challenged parts of the business. “Given consumers’ sustained demand — and willingness to pay a premium — for great content, Studios remain one of our primary growth levers,” WBD said in a shareholder letter with its full-year financials. “Delivering more consistency and profitability is a top priority. In 2025, industry leader WBTV will play a key role in helping to secure that momentum, with support from improved expected results from our Motion Pictures Group and Games businesses. While results from these divisions were disappointing in 2024, we have taken action to improve performance and are optimistic about their long-term outlook.”

Taken together, the conglomerate predicted “a healthy improvement” in Studios segment profitability this year. Meanwhile, at the film studios, WBD said it is targeting a “more economical average cost per film driven by a mix of high-profile, tentpole releases and more modestly budgeted films, such as New Line’s horror-genre releases.”

The impact of these changes should be “most visible at DC” given that “revitalizing this key franchise has been one of our top priorities,” the company said. “The upcoming release of Superman will kick off a thrilling new era for DC Studios – one that promises to excite, engage and resonate with lifelong fans and new generations alike” and kicks off a multi-year story arc.

Finally, “2024 was a disappointing year for our games business,” leading it to unveil a restructuring plan to “refocus our resources and capital on proven IP and games from proven, world-class studios,” WBD emphasized. The focus will be on four tentpole franchises that have each generated more than $1 billion in consumer sales in the past: Harry Potter, Game of Thrones, Mortal Kombat and DC, “particularly top-tier characters like Batman.” WBD even signaled a gaming loss in 2024, saying: “We expect to propel our games division back to profit in 2025 and emerge as a more significant contributor to growth in the years ahead.” And it showed no interest in getting rid of the games unit, emphasizing: “We continue to see our games business as a strategic differentiator as we immerse fans into our incredible characters and worlds through interactive gameplay.”

Overall, management sees much upside for the studios unit. Zaslav mentioned last year that it previously made $3 billion a year. “We’ve got to get that back to $3 billion and growing,” he said.

NBCUniversal 

Profit: $1.4B +8% year-over-year
Revenue: $11.1B -4% year-over-year

It was a Wicked year for NBCU’s film and TV studios business. Yes, Universal had to cede the number 1 worldwide box office position to Disney despite such hits as Wicked (which has crossed the $725 million global box office mark), Despicable Me 4 ($970 million), Kung Fu Panda 4 ($545 million-plus), Twisters ($370 million-plus), and The Wild Robot ($325 million-plus). But it made for the third year in a row that it ranked either number 1 or number 2. The slate did well, but not as well as The Super Mario Bros. Movie, Oppenheimer, Fast X and others in 2023. And studios unit revenue dropped 4.6 percent to $11.1 billion, driven by an 18.6 percent decline in theatrical revenue to $1.7 billion and a 2 percent content licensing drop to $8.1 billion.

But NBCU’s studios profit jumped 10.7 percent to $1.4 billion “due to a decrease in costs and expenses” driven by an 8.8 percent programming and production cost drop and a 6.1 percent decrease in marketing and promotion spending, both driven by 22 releases, two fewer than in 2023 (three less at Universal outweighed one more at Focus Features). “Our TV studios ended the broadcast season with more top 10 series than any other studio,” Comcast president Mike Cavanagh during a Jan. 30 earnings call. “We are excited about the 2025 slate, which includes How to Train Your Dragon, Jurassic World Rebirth, and Wicked: For Good, just to name a few,” Comcast CFO Jason Armstrong touted but also shared a financial word of caution. “While we expect another strong theatrical and PVOD run, studio (profit) growth will be impacted in 2025 by higher marketing expenses tied to a larger film slate and lower carryover from prior years given the writers’ and actors’ strikes in 2023.”

Disney

Profit: $864M turned positive
Revenue: $8.3B +6%year-over-year

Disney is back creatively, and back on top in terms of global box office, as its $5.46 billion handily beat out Universal’s $3.75 billion. Its Inside Out 2 and Deadpool & Wolverine were the only two films of the year to cross the $1 billion box office mark globally. Plus, Disney had three top-grossing movies in the top 5, namely Inside Out 2 (which has made around $1.7 billion worldwide), Deadpool & Wolverine (more than $1.3 billion), and Moana 2 (more than $1.0 billion). Disney’s fiscal year ends in the fall, but THR crunched the numbers for calendar year 2024 to use figures for the same period as the company’s peers. That said, Disney’s financials aren’t directly comparable to other Hollywood giants. After all, since a reorganization for the streaming age a few years ago, it hasn’t reported results for a film or studios unit, instead posting financials for its “content sales/licensing and other” segment, which THR analyzed. Analysts see that as not comparable but as the closest equivalent to its former studio unit.

The segment includes the sale of film and episodic television in TV/SVOD and home entertainment (some of which was previously reported as part of the giant’s media networks unit), distribution of films theatrically, licensing of music rights and its stage business. Disney’s revenue for the 12 months of 2024 in this content segment rose 6 percent, and the segment swung to a profit thanks to the higher revenue and lower operating expenses, driven by reduced programming and production costs. Within revenue, TV/SVOD distribution revenue increased, but home entertainment distribution revenue declined, regulatory filings by the company show.

“I want to thank and congratulate our creative teams on such an incredible year,” Disney CEO Bob Iger said during an earnings conference call in early February. Looking ahead, “we have a lot more to come with an exciting slate of theatrical releases tied to some of our most popular IP,” he said. Among them are the recently launched Captain America: Brave New World, as well as the upcoming Snow White, Lilo & Stitch and The Fantastic Four: First Steps. In a November call, Iger also highlighted the virtuous cycle of Disney. “A successful Disney movie today drives more value than it ever has in the past, with our increased number of consumer touchpoints extending the reach and impact of our world-class storytelling, from streaming to parks and resorts, cruise ships, consumer products, and games. This multiplier effect means that the system economics of our movie business has never been stronger,” he said. “When we have success in a feature film or even when there is expected success, the consumption of prior films … goes up, spikes significantly on the (streaming) platform. So, if you were to look at the numbers for Inside Out 1 as Inside Out 2‘s trailer hit or what’s happening with the first Moana film or what’s happening with a number of Marvel properties since Deadpool & Wolverine came out, and I could go on and on, it’s quite interesting for us in terms of raising consumption.”

Sony

Profit: $628M -13% year-over-year
Revenue: $8.3B -4% year-over-year

Bad Boys, bad blood, bad ghosts, mixed financials – that is one way to sum up 2024 for Sony’s Pictures division as the company celebrated 100 years of Columbia Pictures. The company also cited the fact that the impact of the dual Hollywood strikes on the product pipeline peaked in 2024. Bad Boys: Ride or Die (with a global box office of more than $400 million), It Ends With Us ($350 million-plus), with led to the ongoing legal battle between Blake Lively and Justin Baldoni, and Ghostbusters: Frozen Empire ($200 million-plus) led the box office for the company last year.

The slate’s $2.4 billion theatrical haul outperformed the $2.1 billion reached in 2023, which had been led by Spider-Man: Across the Spider-Verse. The acquisition of Alamo Drafthouse Cinema, in a landmark deal that put Hollywood studios back in the theater game, also helped boost revenue, as did anime streamer Crunchyroll’s paid subscriber growth and a slight gain in the media networks business of the unit. But total revenue at Sony’s Pictures unit dropped slightly, driven by delays in the delivery of TV shows in the aftermath of the dual Hollywood strikes that led to a 25 percent decline in Television Productions revenue to just above $3 billion from more than $4 billion in 2023. The drop came despite the launch of such news series as Dark Matter on Apple TV+ and Cruel Intentions on Amazon Prime Video. The Pictures segment’s profit declined 13 percent for the calendar year. “There is still some impact of the strikes, such as postponement to the fiscal year ending March 31, 2027 of the theatrical releases of the next Spider-Man and Jumanji movies,” Sony highlighted in its most recent earnings update. “However, production activity is recovering. In television productions, the production of new shows, which was impacted by the strikes, has almost stabilized.”

Paramount

Profit: –$96M improved but still in red
Revenue: $3B unchanged year-over-year

Sonic the Hedgehog may be super-fast but the change at his home studio moved at a glacial pace last year. Revenue was unchanged at $2.96 billion as Paramount, which is nearing its sale to David Ellison’s Skydance Media, continued to write red ink in its Filmed Entertainment unit but it narrowed its loss in 2024 thanks to slightly lower expenses. The studio had 10 films in 2024, including five that debuted at the top of the domestic box office, compared to eight in 2023. Theatrical revenue came in at $813 million in both of the past two years. Theatrical releases in 2024 included Sonic the Hedgehog 3 (whose global box office has topped $480 million), Gladiator II (more than $460 million), and A Quiet Place: Day One (more than $260 million), compared to 2023’s Mission: Impossible — Dead Reckoning Part One, Transformers: Rise of the Beasts, and Dungeons & Dragons: Honor Among Thieves. The segment cited a 3 percent decrease in content costs primarily reflecting “the comparison against costs incurred in 2023 to retain our production capabilities for certain delayed film productions during the labor strikes and incremental costs incurred to resume film production following the strikes.”

But in its latest earnings report in February, Paramount management expressed confidence in its film strategy. “Paramount Pictures’ franchise-driven strategy delivered significant revenue growth in the fourth quarter, supported by Sonic the Hedgehog 3, which is approaching nearly $500 million at the global box office, making it the highest-grossing film in the franchise, and is expected to be one of the 10 most profitable Paramount Pictures releases of the last decade,” it highlighted. “Ridley Scott’s Gladiator II crossed $460 million globally and Smile 2 debuted at #1 at the global box office, outearning its predecessor’s opening weekend and demonstrating strength and balance of the studio’s theatrical offerings.”

Paramount’s filmed entertainment segment results are reported net of inter-company transactions, meaning sales to sister companies, primarily Paramount+, but also CBS and the firm’s linear cable networks. In contrast, many peers report segment results with those included and record these inter-company eliminations at the corporate level. During the recent earnings conference call, Brian Robbins, CEO of Paramount Pictures and co-CEO of Paramount Global, lauded a new 30-picture Paramount slate financing deal with Domain Capital Group. “In Domain, we found a committed and experienced partner to be in business with and a structure that really has positive free cash flow and operating income attributes,” he said.

Netflix

Profit: $7B +49% year-over-year
Revenue: $39B +16% year-over-year

In comparison to Hollywood conglomerates’ traditional studios business, Netflix’s 2024 revenue grew 16 percent to $39 billion and operating income jumped 50 percent to $10.4 billion, exceeding $10 billion for the first time in the company’s history. The streamer, whose hit series included Fool Me Once, Bridgerton, and Squid Game, and whose big films included Carry-On and Damsel, added around 9.5 million global subscribers to end the year with 301.6 million. With Netflix having now ended regular subscriber data disclosures, the streamer is forecasting 12-14 percent revenue growth in 2025 to $43.5 billion-$44.5 billion. “We estimate there are now 750 million-plus broadband households (excluding China and Russia) and $650 billion-plus of entertainment revenue in the markets we operate in, of which we only captured around 6 percent in 2024,” the company said. “Similarly, we believe we account for less than 10 percent of TV viewing in every country in which we operate, all of which suggests a long runway for growth as streaming continues to expand around the world.”

Sources: Earnings reports and SEC filings. Netflix, Disney and Sony report operating profit, Paramount reports adjusted operating income before depreciation and amortization (OIBDA), while Warner Bros. Discovery and NBCUniversal report adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Profit and revenue figures in the billions are rounded and focus on the calendar year 2024 compared with 2023, even though Disney and Sony use different fiscal years.

This story first appeared in the March 19 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.