How Hollywood failed

The Spectator’s article of the week is by Peachy Keenan

Jul 28, 2026

The Spectator will be sharing one free magazine story a week with our Substack subscribers. To kick things off, here’s Peachy Keenan’s cover story from our August 3 edition, on how Hollywood failed. Plus: Daniel McCarthy on how he invented Nixonmaxxing.

A massive sinkhole recently opened up on Sunset Boulevard at Holloway Drive, just down the street from the heart of Hollywood itself. It’s a fitting metaphor for the financial and creative sinkhole that’s busy hollowing out the entertainment industry. “There’s sheer panic in the ranks. And it’s only going to get worse,” a longtime representative at a major talent agency told me. “We talk about it on an internal Signal chat at work. We can’t even believe how bad things are.”

“The meteor has hit and the dinosaurs don’t know it yet,” according to a director and producer who has spent two decades making movies in Hollywood. But if you read the industry’s own reporting, Hollywood’s on a roll. After a rough few years since the pandemic and the various writers’ strikes, the box office is booming again. Popcorn is popping. Gen Z butts are seated. This month’s Variety cover story trumpeted the happy news: “Hollywood claws back!”

And some of the numbers back up the public ebullience. Thanks to a handful of surprise indie hits and expensive tentpole films that managed not to flop, analysts think 2026 box office receipts will top $10 billion (2025 ended with $8.6 billion).

This year is already filled with features that punched way above their weight. The Devil Wears Prada 2 grossed $688 million, a rare achievement for a female-driven comedy (it wasn’t actually funny, but that’s another story). Super Mario Galaxy was the year’s first billion-dollar baby. Toy Story 5 has made $900 million so far and there are no signs of franchise fatigue for the 30-year-old property (except in the voices of the actors, who have aged considerably).

Project Hail Mary earned almost $700 million globally, was beloved by audiences of all ages and is Amazon MGM Studios’ first major smash. Michael, which seemed doomed to be a disaster after multiple reshoots and its problematic subject matter, Michael Jackson, thrilled audiences and earned another billion for the business. Obsession, a Gen Z dating horror movie made by a YouTuber for $750,000, has made an eye-popping $430 million. Backrooms, which is based on a meme series, became indie studio A24’s biggest hit of all time, beating Marty Supreme and taking $363 million.

And hate it or love it, Christopher Nolan’s dour, race-swapped, modernized, feminized and Emily Wilson-sanitized The Odyssey is the talk of the town. Everyone and their mother is going to end up seeing it, if only to join in the cultural conversation. It’s a rare theatrical event that has already become a worldwide phenomenon. Of course it is. We are all trapped in a cave watching whatever shadow dance Hollywood chooses to project on the walls. It is firmly in control of nearly every single piece of English-language, scripted, longform filmed movie or television available to American audiences. It wields this power virtually without competition or opponent. If you want to see a movie made in English, you are going to watch a product of the Hollywood machine.

Last year, just three studios – Warner Bros. Discovery, Disney and Universal – accounted for nearly 70 percent of domestic box office takings. Hollywood’s share of what Americans actually watch is around 95 percent plus in theaters (by revenue) and 85 to 95 percent in streaming viewing time. They own your butt and your eyeballs and that’s not changing anytime soon. But behind the rosy headlines and inside the plush boardrooms in Beverly Hills and Century City and Burbank, the hope of 2026 looks more like cope. A lot is going wrong all at once, and a huge transition is not-so-quietly under way.

The agent did not mince words. “Streaming has ruined the business. It’s the reason Shari Redstone sold Paramount for peanuts. It’s why Warner Bros. was forced to sell. It’s why Comcast is looking to exit streaming.”

Netflix reported its second-quarter earnings and its stock price sank 11 percent. It’s down 40 percent over the year. Why? Because people who watch Netflix shows when they first air are not returning for the second season. Can anyone name a Netflix show they love right now? They’re not hitting. And there are no more lucrative linear TV cable markets and syndication dollars to keep things afloat. Meanwhile, Netflix’s subscriber base has plateaued. It was forced to add a subscription tier that lets users skip ads, which it said it would never do. And it keeps raising prices.

This has led to fewer movies being made overall. Twenty years ago there would be a few huge event movies and a few quirky indies per year, but the bulk of the moviemaking was mid-tier talkers, mid-budget dramas, rom-coms and comedies. Those have virtually vanished. All the studio eggs are now in the baskets of the few event films and handful of indies they pin their hopes on at film festivals.

Netflix is not alone in the carnage. This year, Disney+ has seen one of its most high profile and expensive streaming series flounder. Percy Jackson Season 2 viewership crashed a disastrous 62 percent from the first season. Some critics complained it’s because every character except Percy has been race-swapped for more acceptable diversity choices. They just can’t help themselves, I suppose. Disney+ has hiked subscription prices again, naturally.

In response to its disastrous stock tumble, Netflix revealed it will stop giving lame people with bad ideas $100 million creator deals (Meghan Markle, the Obamas) and will try to make shows people actually want to watch. Just kidding!

Instead, after the alarm bells rang on Wall Street, Netflix CEO Ted Sarandos announced that the company will no longer reveal its total watch numbers as often. Problem solved!

Who are the dinosaurs who don’t know the meteor has hit them yet? They are the elite gatekeepers who control the pipeline of projects and money flowing through agencies and studios in Hollywood. They are the people who decide what gets made. And in case you were wondering if these Hollywood studio execs really are as moronically liberal as you think – why yes, they are.

There is a reason the movies and television shows that end up getting pushed through the money-talent pipeline are – how do I put this delicately? – absolute garbage. It was so bad last year that Moana 2 (a totally mediocre movie) did more business than all the Best Picture nominees combined.

A longtime creative executive at a large Hollywood production company broke it down for me. “Here’s the biggest problem, and I see it and hear it literally on a daily basis,” she said. “Most of the agents, managers, studio and network execs are liberal, ultra-woke LGBTQ types, and enormous nerds. In every meeting, everything is gay or BIPOC [Black, Indigenous, People of Color]. I feel like I’m taking crazy pills sometimes. They have absolutely awful taste, so when it comes time to push new projects, they make the worst picks. If Schwarzenegger or Stallone came around today, none of their classic 1980s movies would ever get made. Yellowstone creator Taylor Sheridan is a complete anomaly. Not because there aren’t others like him out there, but because in today’s Hollywood there’s almost a zero percent chance they’ll get a shot.”

The same can be said for the brilliant directing duo Phil Lord and Chris Miller of Project Hail Mary, who were plucked right out of college and handed a television deal after Michael Eisner, then CEO of Disney, happened to read about Miller’s animation project in the Dartmouth College newspaper.

“You should hear some of the things my colleagues tell me in private,” the creative told me. “The Trump Derangement Syndrome might be worse than ever. There’s so much cognitive dissonance. But meanwhile they all secretly voted for Spencer Pratt! Every last one of them.” Yes, box office takings are up on last year, but the number of people going to the movies is massively down. In fact, it never recovered from the pandemic. In 2019, 1.24 billion movie tickets were sold in North America. In 2025, just 769 million. The bump in profits this year may be largely thanks to the huge increase in ticket prices, rather than bigger audiences – especially with IMAX screenings costing $30 to $40 in some markets.

Studio movies cost too much, are too few, and wildly underperform. Snow White, the live-action Moana remake and DC’s Supergirl cratered and took out the careers of bigtime directors and entire streams of future IP. The Mandalorian and Grogu? No one cared. All of these hot messes looked phoned in and failed to connect with audiences.

Conservatives like to mock Hollywood for going broke because it went too woke. And it’s true: perceived inauthentic DEI or race-based casting choices poisoned audience reception for remakes of classic fairy tales The Little Mermaid and Snow White. People simply don’t want to see iconic characters they’ve loved for decades fall prey to trendy woke casting directors, or lame “girl boss” and Mary Sue characterizations. Audiences are exhausted and bored with the safe feminist messages shoved down their throats until they choke.

Lesbian Jedis? A Black Professor Snape? Multiracial hobbits? Bisexual superheroes? Emo Darth Vader Jr.? How about you people start making the storytelling good instead?

Disney will get one more bite at the (poisoned) live-action princess apple with its version of Tangled, which is back on track after Snow White melted on arrival. To the surprise of many Disney fans, they finally decided to cast an actress who looks a lot like the classic Rapunzel character. She’s Caucasian! She’s blonde! She’s pretty! Oh no! The anti-woke backlash, in other words, broke the magic spell that had been forcing the studios to DEI-wash everything.

Andy Serkis, who is directing a Lord of the Rings prequel, was grilled by a journalist recently on why he hasn’t chosen a racially diverse cast for his version of Middle-earth. To his credit, he defended the original story and his decision not to be “politically correct” or to “tick boxes.” Tolkien’s world was inspired by medieval Europe and Norse mythology, and Serkis is, shockingly, staying faithful to that.

Hollywood is still home to most of the big studios. They preside over a massive empire of empty soundstages on backlots across the city, the echoes of blockbusters past just memories to the unemployed stagehands. (Here’s my pitch for a Backrooms sequel: a studio stagehand gets trapped in those empty, infinite backlots.)

By 2025, film and television production in Los Angeles had fallen nearly 40 percent in a decade and the local sector had 25 percent fewer film and television jobs than in 2022. But the overseas market is picking up the slack: other countries are dumping a projected $248 billion into film and TV production through tax credits, rebates and purpose-built production facilities. Even with tax credits, production just costs too much in the United States.

Meanwhile, foreign governments are paying filmmakers to shoot with them instead. “The UK will give you free equity in your movie, and give you 50 percent back in tax credits,” the creative executive told me. “You can get a million pounds in government grants. American actors are now all signed with the European talent agencies. Chris Pine is starring in an Italian movie right now – and he’s speaking Italian in it.”

Another indie filmmaker I interviewed pinpointed the key problem with shooting in the United States: the unions. He described them as almost a mafia cartel that can effectively hold small movies hostage. “The unions chased everyone away. The International Alliance of Theatrical Stage Employees is the one that destroyed everyone. You have to sign a contract with IATSE and they want a $100,000 bond in case you don’t pay them. For one of my movies, they raised the bond to $175,000 at the last second. Once we wrapped, they decided to keep $25,000 of our money, since they claimed we didn’t pay the music supervisor. Only here’s the catch: we never even hired a music supervisor, since we didn’t have music that needed supervising. They kept our money and told me they were adding it to IATSE’s general fund. I shot my next three features overseas.”

What do smaller indie studios like Blumhouse (Obsession), A24 (Backrooms) and NEON (Anora, Parasite) understand that the soon-to-be-extinct behemoths don’t? That authenticity is everything. Originality is king. And Gen Z tastes are firmly in control.

Twenty somethings are rigid in their preferences: they aren’t interested in AI slop, boomer-era retreads or worlds that don’t reflect their own. They don’t care about politics, left or right, and absolutely do not care if they are “represented” on screen. Those are ancient, boomer-tier rules that they reject. Gen Zers are not necessarily “based,” but they are firmly post-woke.

The director I spoke to put it this way. “Nobody wants to watch AI actors. No one. Gen Z audiences do not want that. They want practical effects, real locations. The Mandalorian and Grogu failed because of shitty AI backgrounds and effects. The next Avatar movie is already in the can – it’s finished, but no one is going to see it. It doesn’t even come out until December 2029! That movie is fucked.”

Back to the meteors that took out the dinosaurs. The first meteor hit in January when a YouTube gamer called Markiplier – famous for streaming himself playing Five Nights at Freddy’s – released Iron Lung, a horror film based on a video game, that he wrote, directed, starred in and self-financed for about $3 million. Having 38 million YouTube subscribers lets you do things like that. He also self-distributed after studios passed on it. On its opening weekend the movie nearly beat Sam Raimi’s Send Help, starring Rachel McAdams, making more than $17 million in two days. His movie finished its theatrical run at about $51 million.

The next meteor hit when another YouTuber, 26-year-old Curry Barker, debuted his Gen Z dating horror movie, Obsession. It’s grossed more than $430 million so far, and is now the highest-grossing film made for less than $1 million since Bruce Lee’s Enter the Dragon. Barker turned down a $10 million offer from Warner Bros. to take $20 million from Universal – a check he pockets simply for promising them the rights to his next film.

Yet another meteor blasted its way out of the deep bowels of the internet: Backrooms. Made by 20-year-old YouTuber Kane Parsons, it was born in the literal back rooms of the internet: the 4chan creepypasta forum. Impossible to describe, it involves a man lost in the depths of a supernatural office space, chased by monsters.

But wait, there’s more! Trevor Henderson is a Canadian illustrator known for posting his art on Instagram. When Backrooms and Iron Lung took off, so did the studio race for Henderson’s horror sketches. One of these, called “Siren Head,” just sold to Warner Bros. after a five-way studio bidding war. There is no book or script or story; it’s just a few images and some lore.

Two weeks later, Sony came calling for another Henderson character: “Cartoon Cat, an ancient hollow rot that uses the collective human awareness and memories of old cartoons as a passageway to manifest into our reality.” It’s being fast-tracked into production as I type.

All the old dinosaurs are now lumbering to get in on the action. Steven Spielberg just signed on to produce a movie based on the viral YouTube horror series The Mandela Catalogue, about “shape-shifting ‘alternates’ invading Mandela County, Wisconsin, using distorted VHS-style media to psychologically torment victims.” Amazon MGM Studios and United Artists acquired the rights after an 11-studio bidding war. The creator, Alex Kister, is 23 years old.

Memes, deep internet lore and horror: this is what young people want, and the Hollywood dinosaurs are now in a desperate race to avoid extinction and mint the next babyfaced blockbuster maker.

Will it work? Are Christoper Nolan and his woke casting director out of jobs? “The theme has to resonate with 20-year-olds, and if you pander, you’re dead. Gen X was scared of getting stabbed at sleepaway camp by a serial killer in a mask. Gen Z is scared of possessed girlfriends and spooky office buildings. The same old thing is not going to work with this audience.”

But what about Gen Xers like me, who don’t have any interest in watching memes turned into two-hour horror movies? What if some of us just want to laugh, cry and be entertained? Is that too much to ask? Project Hail Mary nailed the formula. Can they repeat it, or is everyone over 30 consigned to rewatching 1980s and 1990s classics?

The high-paid gatekeepers who greenlight big projects and move talent and money through the pipelines have no taste and are hopelessly woke. Everyone who isn’t is way too scared of losing their job to point out that the emperor has no clothes.

Some Hollywood-watchers think the new Paramount Pictures (which recently acquired Warner Bros.) might be the ticket: it’s run by David Ellison, whose father Larry is a bigtime Donald Trump supporter. The thinking is that Paramount might finally dump the woke libs who ruined movies and get back to the fundamentals.

Will Paramount be the savior some on the right think it will? (I doubt it.) Can it reshore production back to Los Angeles, or will movies and television shows become yet another iconic American industry lost to cheaper foreign labor? (CEOs love importing cheap H-1B staff to the States, so why would they care if they lose more American jobs?)

Will the dinosaurs quit sniffing the DEI glue and stop worrying about making sure enough indigenous bisexual writers of color are represented in writers’ rooms? (Don’t hold your breath.)

The culture is still as stuck as Odysseus in the Aegean Sea. There are only so many Dune sequels they can make, only so many movies Zendaya can scowl in. There is obviously a massive opportunity for auteurs and creatives outside the regular pipeline. American movie production is broken and it won’t bounce back unless new people take the helm.

Richard Rushfield, a columnist at the Ankler, a newsletter covering the entertainment business, agrees. He thinks the major studio consolidations taking place this year may, in the end, be their undoing. “It’s been a 30-year process toward consolidation and now we’re seeing the beginning of the final stages of this. When everything is forced together in these big conglomerates, that usually means very bad things for the industry.”

But this top-heavy future will, conversely, create opportunities for new and more nimble players. “As the house of cards starts to fall down, upstarts and outsiders will get their chance,” Rushfield told me. You heard the man: now’s our chance!

The solution is very simple, and for some reason I cannot fathom, it has not yet been truly tried. Someone needs to hang out a shingle, plant a flag and found a new mini studio/agency. Woo the smart and talented people who are trapped and staying quiet in their industry jobs.

“When the libs with deep pockets get behind something, they all bust out their checkbooks,” the creative executive observed. “None of the rich tech guys have put any money into our cause.”

Imagine: new tastemakers. Something that can replace the rotting entertainment pipeline that’s leaking and threatening to suck Hollywood into a bottomless sinkhole. Build it and watch the culture bloom. This could literally happen tomorrow.

Hollywood needs a new hero. Not just to save a quintessential American industry but to save classic American storytelling for the people who need it most: you and me.

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