With production moving overseas and changing audience viewership and listening habits on streaming platforms, the entertainment and music industries are rapidly changing. Layoffs over the past two weeks have seen top executives at Netflix and Universal Music Group leaving, following confirmation from Skydance CEOs that the merger will lead to layoffs.
This shake-up across music, film and television comes as earnings season approaches, and publicly traded companies announce their third-quarter financial results. With many high-profile departures, it seems cutting labor costs in an effort to restructure may not just be a company-wide, but industry-wide phenomenon.
Following the completion of the Skydance merger, in an Oct. 6 press release, Chairman and CEO David Ellison and Co-CEO Ynon Kreiz said the merger would result in “change, including difficult decisions that affect our workforce,” in their effort to achieve $6 billion in synergies.
While Paramount declined to comment on the extent of the forthcoming layoffs, according to a report from the L.A. County Department of Economic Opportunities on its potential economic impact, regardless of whether the merger would have taken place, the industry would continue to face wider, external financial challenges as a result of the changing market conditions.
The report cites declining commissioning and increasing competition from other production locations as issues that will continue to affect the entertainment industry in L.A.
According to Adam Fowler, Co-Founder of CVL Economics, the firm that prepared the report, the recent layoffs can be attributed to two changes happening at once: a shift in how people spend their time, and a shift in where the industry produces content.
“Traditional television revenues are under pressure, while streaming services are working to retain subscribers, build advertising businesses and improve returns on content spending,” Fowler said in a statement to Los Angeles Magazine. “Those economics influence what gets commissioned, production budgets and how companies organize their workforces.”
Fowler said at the same time, other countries like the U.K. are providing better tax incentives and prioritizing creating production infrastructure and workforce development opportunities, offering an alternative filming location to L.A.
“Lower production costs and stronger local support can help the region compete for projects, but they do not by themselves reverse changes in audience behavior or the economics of commissioning,” Fowler said. “When projects disappear or move elsewhere, the consequences extend to crews, post-production businesses, equipment suppliers and other local employers.”
Employment in the entertainment industry depends on both the changing economics of capturing attention and global competition, Fowler said. Audiences have increasingly shifted their attention towards free platforms like YouTube, over Netflix, Max and Paramount+ that rely on a paid subscription model.
According to Nielsen data, as of July 2026, YouTube led in the U.S. with 14.2% of monthly TV viewership. Netflix was second with 7.8%, just over half of YouTube’s share.
“These companies are competing; all of them are competing very sharply against each other, but also against YouTube, which has a very different business model, a very different cost structure, but has been doing very well in terms of engagement,” said Jonathan Handel, an entertainment and technology attorney.
From July 2025 to July 2026, YouTube saw a 0.8% increase, while Netflix’s viewership decreased 1%. Paramount and Warner Bros.’ respective streaming services made up a combined 3.6% of monthly viewership at the time, according to Nielsen.
Handel said that advertising-based video-on-demand models, like Tubi, Pluto and The Roku Channel, also stand to show streamers some competition. Roku and Tubi made up 2.9% and 2% of viewership respectively, outpacing Peacock and Paramount.
Changes in viewership habits on streaming services are mirrored in the changes to listeners streaming in the music industry as well. UMG saw a slowing in subscription streaming revenue, as it decreased by 1.2% between the first and second quarters of this year.
“Our consistent success has been built on our ability to anticipate industry changes, act early to better serve all our artists and songwriters, and capture opportunities in music’s fastest-growing areas,” a UMG spokesperson said in a statement. “Where we have made the difficult decision to remove certain roles, we are deeply grateful for the contributions of the people leaving us.“
According to its second quarter earnings report, UMG’s revenue has increased 5.3% year-over-year, driven by the consolidation of Downtown Music Holdings, which it acquired for $775 million earlier this year.
Netflix announced on Tuesday in its third-quarter earnings report that its revenue grew 12% year-over-year and its operating margin was 34.6%. Fowler said profits and workforce reductions can coexist when companies are reallocating spending or seeking higher margins. Handel said given these changes, and the development of artificial intelligence, he expects the industry will remain in a period of instability.
“There will continue to be pressure on content spending due to engagement issues and due to different business models over at YouTube and also AVOD models,” Handel said. “So all that together says to me that we’re not entering a period of stability. We’re going to continue to see disruption and changes in business models.”
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