This article was originally published by The Ankler on July 15, 2024 and authored by Elaine Low who covers the entertainment industry.
Hello Series Business readers, some of whom may be returning from international vacations only to be faced with the grimmest of news cycles on the American political stage. There are far bigger things happening in the world than the ins and outs of the TV business, but the work (and your work) continues, and we’re here to focus on that today.
Hard to believe it was just one week ago when the Paramount-Skydance deal was announced, and incoming Paramount Daddy David Ellison laid out a vision for the merged company that was very focused on technology. “We need to transition New Paramount to a world-class media and technology enterprise,” he said, adding that it is “essential for Paramount to be able to expand its technology prowess, to be both a media and technology enterprise.”
What exactly he means by that isn’t quite clear yet, but already one veteran media and tech exec tells me that Ellison’s pitch is “a bunch of nonsense,” something he said simply to convince Shari Redstone to finally release the company from her family’s stewardship. (Although Ellison has spent a lifetime near technology, that’s different than, say, cofounding a $400 billion database and cloud computing company like his father.)
You can hardly blame Ellison. Netflix, for example, has a $283 billion market cap with $33.7 billion in 2023 revenue while Paramount made $29.7 billion in revenue last year and has an $8.1 billion market cap. (Paramount, of course, lost $451 million in 2023 while Netflix generated almost $7 billion in operating income.)
It’s not as if all of the legacy studios aren’t already investing in tech solutions and the people to execute them. To be an entertainment company in 2024 is to be a tech company. That has meant the influx of thousands and thousands of software developers, engineers, data analysts, UX designers and other technologists into legacy Hollywood over the last decade or so.
As I covered this spring, studying the job listings at places like Warner Bros. Discovery and Disney quickly reveals that technology roles are in demand — far more than creative jobs — as the majors regroup for the next stretch of the Streaming Wars.
So when Ellison says that he wants to improve Paramount+’s recommendation engine and ad tech, and lean on AI in the creative process (while trimming $2 billion in costs at the same time), he’ll be joining an already highly competitive field where studios are fighting against massive tech companies dabbling in media (Amazon, Apple) — as well as other tech businesses and really every other enterprise — for tech talent.
And the big question is whether Hollywood can attract the caliber of talent it needs to compete.
So what obstacles does not only Paramount but all of traditional Hollywood face as it revamps itself with tech in mind?
“The real challenge, in my mind, is that building a tech-enabled media company in the public eye is a very hard task,” says Mike Doonan, managing partner of executive search firm SPMB, which recruits senior leaders across some of the largest media and tech giants. “You can be a tech company that is in the media space — Netflix, Amazon — and that is different. But to be a traditional media company, with a Wall Street analyst community judging your profit and growth as a media company, and trying to change that story to ‘We are a tech company,’ that can be a very dangerous and challenging thing.”
(Anyone remember Adam Neumann trying to sell the idea of co-working space as tech?)
Since Ellison put a spotlight on this issue, let’s take a look at the Talent Wars. In this Series Business, you’ll learn:
- Four things studios can use to woo talent that tech companies typically can’t
- The compensation challenges legacy studios face — and how they can overcome them
- What traditional entertainment companies have to do before they can compete for tech company talent
- Salary comps for Silicon Valley jobs and comparable entertainment ones
- How today’s hot market for tech talent helps and hurts entertainment companies
- Hollywood’s rockstar problem that can make a tech job here less appealing than one in Silicon Valley or at a tech-first company like Amazon, Apple or Netflix
A Hot Market
Hollywood is diving into the tech job market at what appears to be an opportune time. After tech’s own wave of layoffs and focus on “efficiency” in 2022-2023, there is now a “massive backlog” says SPMB’s Doonan.
“There is great tech talent on the market that they can get today that they could not get during the market run-up of 2020-22, and they can get it at a reasonable price,” he says. “There is a bit of a mad rush to do 18 months of hiring in what feels like 18 days or weeks.”
While there is high-quality engineering talent available, now that tech companies are off the sidelines and hiring again — as they have been the last two quarters, according to Doonan — competition is fiercer than ever.
The issue then becomes whether working at a legacy media company is appealing.
The Most Important People in the Room
Then there’s the culture shock. A hotshot engineer might be a rockstar in Silicon Valley but a mere cog in the Hollywood machine.
“Most media companies don’t understand the level of clout engineers have in tech companies, even junior engineering talent,” says Doonan. “At the same time, executives coming from traditional technology companies don’t understand why their opinions are not the most important in the room at a traditional media company.”
Because of this kind of empowerment (or coddling, depending on your point of view), mid- to junior-level engineers at many traditional tech firms can have “veto rights” over many major business decisions. Meanwhile, the power in media companies is typically concentrated in creative or distribution.
The metrics for success can also be a little fuzzier in entertainment. “Media companies are significantly more relationship and politics driven, as well as now focused on efficiency,” says Marc DeBevoise, CEO of streaming tech company Brightcove and the former chief digital officer of ViacomCBS. “Whereas the tech company is a much more [of a] throughput culture. Like, what is your output [and that of] your team? If that output is there, then you know you’re doing well.”
Hollywood’s Best Pitch
Switching from Silicon Valley to Hollywood might feel like slumming it for some in-demand tech talent, but there are reasons for them to embrace Tinseltown.
Several headhunters I spoke to made a point of emphasizing the appeal of work-life balance — if you don’t see bragging rights in sleeping on a mattress in your office, Elon-style, then maybe the entertainment industry is the place for you. Even fresh Stanford grads who don’t mind plowing away for 100 hours a week eventually reach a point in their lives where they want families or downtime.
Then there’s the opportunity to assume a wider range of responsibilities and flex those brainiac muscles at a Hollywood entity.
For instance: After leaving ViacomCBS, DeBevoise taught for a spell at NYU’s Stern School of Business, where he recalls hearing from a student who went on to work at Facebook.
“‘I worked on the same . . . button for two years,’” he recalls his former student telling him. “You get very compartmentalized sometimes in some of those larger companies.”
Among those specialized tech giants, “top engineers work on very narrow, highly specialized pieces of very narrow projects, which can feel boring and limiting,” echoes Julia Pollak, chief economist at ZipRecruiter. “By contrast, Hollywood studios offer the chance to work on entertainment-focused projects, including streaming services, content creation tools and other innovative media technologies. Their tech teams are often newer and younger, giving members the opportunity to wear many different hats, move quickly, innovate and have an immediate impact on discrete projects.”
A new AI tool, a better way of doing data analysis, a chance to help mold the future of entertainment technology that will be used by hundreds of millions of consumers. That’s a fair amount more exciting than being stuck optimizing one part of the machine.
“Many of the Hollywood players have embedded, historical audiences that are extremely loyal,” says Doonan. “If a very senior engineer could create new products and services that are that much more appealing to billions of global viewers/customers, that would be very attractive.”
Plus, there are the perks of attending movie premieres and getting within shouting distance of beautiful A-listers or working on a historic studio lot — something a tech pure-play can’t offer in quite the same way. (Straddling that sweet spot are Amazon and Netflix, which operate at Culver Studios and Sunset Bronson Studios, respectively.)
“In Hollywood studios, tech professionals get the opportunity to collaborate with writers, directors and other creative minds,” says Pollak. “That can be a uniquely inspiring and exciting work environment, especially for tech workers who are film enthusiasts.”
But Then There’s the Money
Compensation and perks-wise, it can be tough for a legacy TV or film studio to compete with a place like Nvidia or Microsoft. Stories just a couple of weeks ago chronicled how a mid-level Nvidia employee who held onto their equity for the last five years would now be a multimillionaire thanks to the stock’s 3,000 percent growth in that time. (Just to horrify everyone, here’s what the last five years looks like for the major entertainment players: Paramount, -77 percent; WBD, -70 percent; Disney, -30 percent; Comcast, -11 percent; Amazon +96 percent; Netflix +108 percent; and Apple, +362 percent.)
“It is definitely harder in companies that have depressed stock prices, that are going through cost cuts, that have less of the sexy things like content that they’re committing to,” says DeBevoise.
But “people still are paying high salaries for tech positions in Hollywood,” says JLS Media’s Joanna Sucherman, who has placed senior leaders at clients such as Fox, Disney and NBC. “They’re not Netflix salaries, they’re not tech salaries, but they are strong competitive salaries.”
According to ZipRecruiter’s Pollak, the average base salary in a job listing for a data scientist in Los Angeles is $119,000, but for a data scientist working on streaming in particular, that average jumps to $178,000.
To echo Sucherman, though, they are not Netflix salaries. A current job posting for a machine learning research scientist (in Los Gatos) has a salary range of $400,000 to $960,000, with the candidate ultimately deciding how much salary versus stock they receive. A data engineer in Los Angeles can make between $170,000 and $720,000 annually. Over at Disney, a principal software engineer can make $180,700 to $242,300 in L.A.
Even though the cost of living in L.A. can feel unsustainable — just look at any of our Salary Confessions for proof — it nevertheless remains arguably more affordable than Palo Alto or Mountain View or San Francisco.
The entertainment players with tech roots are more likely to pony up cash. SPMB’s Doonan says that some companies — Netflix and Amazon, namely — offer similar compensation packages to major tech firms, including base pay, bonuses, equity and vesting schedules.
Although legacy studios don’t have an issue with offering attractive salaries, Doonan notes, “they really struggle to understand the equity package that it takes to land someone who is used to the tech company compensation structure.”
One of the big sticking points is that tech companies can allow employees to vest their stock grants on a quarterly basis rather than over four years, for example.
“Some executives within media companies, and these are very senior people, don’t even believe me when I walk them through the [size of the] equity grants and vesting schedules of tech executives,” says Doonan. While they’re “not wrong to ask that question . . . the answer is that if you want to compete with big tech, you need to mirror their compensation packages. Otherwise, it’s not worth even getting into the game.”
That’s not to say that every historic Hollywood house doesn’t have their head in the game. WBD, as he understands it, may not be as aggressive on compensation, but is “much more flexible than the traditional players.” (Of course, this would be more valuable if WBD’s stock didn’t keep hitting record lows.)
Media companies are also often willing to offer multi-year contracts where pure-play tech companies do not. This can be viewed as a good or bad thing, depending on whether you consider a contract as a sign of job security or a tether preventing you from jumping to a better gig.
Baby Steps
Any major studio looking to remake itself in the image of Silicon Valley has a real task ahead, one that involves reframing the way it views technology, and how much it is willing to cede some control to — or at least share its front row with — its engineers and developers over its tastemakers and creatives.
The common jeer at Netflix, after all, is that it depends on algorithms and data at the expense of the human element of filmmaking. And the looming specter of AI dominated the picket lines all last year. But the former has comfortably taken the throne as the top streaming platform thanks to its tech savvy, and the latter seems more a matter of coexistence rather than elimination.
If anything, Old Hollywood’s derision of technological advancement may impact its ability to attract the best talent — and remain relevant in a world dominated by social media entertainment and increasingly short attention spans. (One alternative: Outsourcing tech infrastructure to companies like DeBevoise’s Brightcove, which counts AMC Networks as one of its reference customers. Most major media companies use a mix of homegrown talent and third-party vendors, he says.)
“Reconciling this can be a challenge, and is one reason why I did not advise most of my traditional media companies to hire directly from big tech,” says Doonan. “They may have aspirations to become a tech company, but there are many steps to get there and those are often overlooked, especially in a hot market.”
