Hollywood is in the midst of a structural transformation. The independent film and TV studios are dwindling as larger media companies snap them up. At the same time, these large media companies are themselves merging, reducing the number of studios overall (such as Disney/Fox and ATT/Time Warner).
Despite that transformation, business is booming in Hollywood, and it only seems to be getting better. The cause for that boom? Streaming video services, which are taking over more and more of consumers' time, and are expanding in Hollywood accordingly.
As with so many things in streaming video, it began with Netflix, which started leasing office space in Hollywood in 2003, when it had 4,000 square feet. Earlier this month, the company signed a deal to take over an entire 13-story tower in Hollywood, totaling more than 327,000 square feet. The company also leases more than 400,000 additional square feet of space in Los Angeles. The company says the new space is part of a “continuing investment in L.A. and Hollywood.”
Now, the streaming cash is spreading.
Amazon -- which is investing heavily in streaming video through its Prime Video service, “Thursday Night Football” and Amazon Channels -- during the past year has acquired nearly 350,000 square feet of space at Culver Studios and the surrounding area.
Apple has not even launched its streaming video service yet (it is rumored to debut next year), but it has secured space in a building in Culver City after HBO backed out of the deal. Apple is expected to lease more than 200,000 square feet.
Meanwhile, Jeffrey Katzenberg’s upcoming video service Quibi last week signed a lease for nearly 50,000 square feet of office space in the Hollywood Media District. Quibi is launching with $1 billion in venture funding, including many of the big Hollywood studios as backers.
As companies like Disney and Fox merge, the amount of office and studio space they need will only go down. Meanwhile, CBS earlier this month secured a deal to sell “CBS Television City” in the Fairfax District of Los Angeles.
For legacy media, it is a seller’s market, and streaming services increasingly are the buyers.
In many ways what is happening is a physical manifestation of the overall video marketplace. The biggest houses are still owned by legacy media, but the streaming and technology companies have caught up, and are growing, while linear is on the decline.
Want to know who the big winners and losers will be for video eyeballs in the future? Maybe you should be checking the commercial real estate listings.