WSJ What’s News - What the Entertainment Industry Has in Store for 2025

Episode Date: December 31, 2024

Dec. 31 Edition. As 2024 draws to a close, WSJ’s Los Angeles bureau chief Sarah Krouse talks about the biggest entertainment trends of the year, and what they mean for 2025. And a sluggish housing market has ripple effects in the economy, including on home retailers. Wall Street Journal reporter Kate King tells us what this means for retail real estate moving forward. Plus, much of Puerto Rico is without power on New Year’s Eve. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

How do airplanes fly? What's in this box? What does this thing do? Kids are curious about everything, including guns. Learn how to store your gun securely and make your home safer at nfamilyfire.org. Brought to you by N Family Fire, Brady and the Ad Council. Retailers in the U.S. closed more stores than they opened in 2024. But looking ahead, the news isn't all bad for retail real estate. Even though there were more closures than openings among U.S. retailers in 2024, the retail real estate landscape is still quite strong heading into the new year. And most of Puerto Rico is without power with a full fix 24 to 48 hours away. Plus, what the entertainment

industry may have in store for 2025. It's Tuesday, December 31st. I'm Alex Oslo for The Wall Street Journal. This is today's edition of What's News, the top headlines and business stories that move the world today. Growth in U.S. house prices dropped to its slowest pace in more than a year in October. The S&P CoreLogic Case Schiller National Home Price Index, a closely watched benchmark out today, showed that home prices gained from a year earlier in October, but declined from the previous month.

Even so, this year has been a slow one for home sales. And that has ripple effects across the economy, including on retailers. Data firm CoreSight Research announced that in 2024, more U.S. stores closed than opened, reversing a two-year trend of net openings. And retailers who depend on Americans to buy things to fix up and furnish their homes were one of the biggest drivers of the contraction. Kate King covers retail real estate for the Wall Street Journal and tells us more about what this trend means. Kate, what are some of the sectors affected by this sluggish housing market?

Retailers that sell home furnishings and home improvement materials to Americans are certainly hurt by the housing slowdown. If you aren't selling your home, it's probably likely that you aren't buying new windows or a new hardwood floor to spruce everything up before you putting it on the market. At the same time, if you aren't buying a new house, then you probably aren't spending on those improvements that people usually make after purchasing a new home. As we saw in data out today, home prices are growing more slowly. How does that make things look for retailers moving forward? Does that change the outlook at all for

them? Well, a still sluggish housing market definitely isn't helpful for retailers who sell items to people who are buying and selling their homes. But at the same time, there are some hopeful signs out there. Prices are still elevated and costs for retailers are still elevated, but inflation itself is slowing dramatically compared with prior years.

And also, Americans, after kind of having this surge in spending on experiences in the past couple years, after a long lockdown during the pandemic, are kind of going back to the average spending patterns and the division between spending on items and spending on experiences. So that's good news for home retailers, but what they really need to see sales shoot up is for the housing market to pick up. How does the retail real estate market look more broadly?

So even though there were more closures than openings among US retailers in 2024, the retail real estate landscape is still quite strong heading into the new year. There are many retailers that are still expanding and since there has been very little new construction of shopping centers and malls and other retail real estate in many years, there is high demand for available retail space. So retail vacancy is still quite low, rents are rising, and a lot of retailers are happy that some stores are going out of business because that means there is space for them to open new stores.

That was Wall Street Journal reporter Kate King. U.S. stocks are stabilizing after a rough couple of days, with major stock indexes mostly rising in morning trading. The S&P 500 is up 24% this year through the end of trading yesterday. The Dow has gained 13% and the Nasdaq has risen 30%. U.S. bond markets will close at 2 p.m. Eastern time today, but stocks will trade as normal. Both markets will be closed on New Year's Day. In other news, more than a million people in Puerto Rico are without power.

Luma Energy, a Canadian-American consortium that took charge of the island's electric grid in 2021, said on social media that the cause of the outage is under investigation, but preliminary findings suggest a fault with an underground power line. The company said that it could take up to two days to restore power. And Beijing is pushing to use Chinese-made chips in its electric vehicles. People involved in the industry say that today, about 15% of the chips used by Chinese carmakers

are homemade, an increase from just a few years ago. It's poised to rise even further as the government sets targets and supports domestic chip makers. Last week, the US opened an investigation into China's production of chips made with mature technology that are often used in such areas such as autos and defense. Coming up, from concerts to appointment television, what entertainment could have in store for the year to come? That's after the break. 2024 is drawing to a close, which means you've probably seen lists of the best TV and the

best movies that came out this year. But in a year like this one, those lists are not so easy to make since media and entertainment were increasingly fractured and specific to individuals' tastes. But there were some unifying events and broader themes that could have a big impact on the entertainment business next year. And Wall Street Journal Los Angeles Bureau Chief Sarah Krause joins us now to discuss them. So Sarah, what defined 2024 in entertainment?

It was a year of the rest of the eras tour, of course. Inside Out 2 and Deadpool and Wolverine are the two top theatrical movies of the year. You also have the sort of tried and true hits that continue to do really well on streaming, the Bluey, The Grey's Anatomy, Netflix shows like Bridgerton or Baby Reindeer. One sort of macro theme in Hollywood this year was sort of the continued shakeout from the Hollywood strikes. More than a year passed the resolution of those, but it really had gummed up the works in terms of production,

theatrical release and the like. So we're now just starting to enter a more normalized, you know, air quotes period of releases. I do want to talk about Taylor Swift's Eras Tour. It ended earlier this month after five continents, 10 million tickets and revenue that could be about $2 billion. Some people in the music industry have said that this tour changes everything. So what about it was just so groundbreaking? First of all, start with the length of it and the scale overall. You have 140 plus shows between March of 2023 and the end of this year, 21 countries. The number of shows and the vastness of the performance to have a performer

who's only 35 going through all the different stages of their pretty prolific career on stage playing for three plus hours having surprise nuggets and elements in the show that make every show distinct and the breadth of the shows, the length of the tour, the scale of the whole show really ended up being an economic force in and of itself. In the cities where the Eras Tour went, there was increased spending on hotels, on friendship bracelets are everywhere you look these days. That tour helped fuel a real boom in live events that continues to this day. So, Eras was part of that, but really that's another trend music industry

wide is this boom and everyone hitting the road to tour. In some ways, what you mentioned is so specific to Taylor Swift, right? Like the prolificness of her career and the length of it and all that stuff. I wonder if this is something, the Ares model is something that other artists are going to try to emulate, especially as concerts become a bigger part of their revenue. It's an interesting question. I think that what that hinges on is who can actually get away with it. In that way, Taylor Swift is so singular in her fame and the body of work that she has and how eclectic it is and also in her ability to shape fans' preferences.

Not every megastar can do that and honestly even the list of megastars are quite small. So I think what you do see, partly spur spurred by this is more artists hitting the road. And when I say that, really performers from musicians to comedians to podcasters saying, hey, I can sell tickets to people who want to see me do what I do in recordings live. So that's absolutely a trend that has continued. You touched on the shared experience and how it's something that in the entertainment industry is finding renewed power. One of the places that it surprised me this year, where we saw that was in

streaming, we saw the return of appointment television, we saw live sports, we saw boxing matches that people went out of their way to watch. How are streamers finishing out 2024 and what kind of role does this appointment television play in their 2025 outlook? Streamers are leaning more into live programming and Netflix in particular, it's a big priority as it tries to build an advertising business. So when you can bring a lot of eyeballs together around one cultural or sporting event, that's good news for your ad business. Especially because this year and to some extent the year before, more streamers launched ad supported tiers of service where you as a consumer can pay less if you agree to watch ads and the streamer collects both your subscription revenue as well as ad revenue.

So that's one of the macro themes cutting across streaming. And that's important because streamers are trying to figure out how to keep customers longer. We've all reached to some degree, how many streaming services do I need? And so by giving people that trade-off as a lower cost ad tier, it could be a tool that helps retain them. The other big streaming theme of this year was live sports. It is one of the few pieces of the cable TV ecosystem that remains healthy.

It's been an anchor for a lot of people who haven't yet cut the cord. And streamers want in on that action. They want to bring more live stream sports to their platforms. And Amazon made a really disruptive play for NBA rights this year that will change where those games are available. For sure. I want to do a hard turn in our entertainment industry, zooming out a little bit and looking ahead into 2025, what are some of the trends for entertainment that you're keeping an eye on

into the next year? Podcasts certainly played a huge role in the presidential election, and I think really showed just how much media consumption has changed, where people are turning for their news and entertainment, where they want to hear influential people talk to them. So the power of podcasting is definitely a high level theme that we're thinking about heading into the new year, who the power players are in that, whether it be Rogan or the Theo

Vons of the world. So there continued to be an evolution of the winners and losers in the podcast space. So that's one theme. The other mega theme of this year that I'm certain will continue into next year is YouTube's dominance. That across all the platforms that we follow, younger audiences have definitely flocked to YouTube. That is a primary source of entertainment for a lot of people, young and old.

So you've seen YouTube first top Netflix in terms of having the greatest share of US TV time among streamers, but it's also creeping up on legacy entertainment companies. So when you think about all the ways people consume TV, whether that's legacy TV, streaming, et cetera, YouTube is number two after Disney. And I think that is a trend that is very much worth watching

that speaks directly to how people's preferences are changing. There still is a bit of a divide. We've seen over the last year, some of the YouTube creators trying to get Emmy recognition and more sort of glossy Hollywood acceptance. And it's interesting to watch it ascend in terms of the time that viewers are spending with it,

sort of voting with their eyeballs, so to speak. So there's this sort of convergence theme that we think about as well. What was once the like scrappier user generated content has really turned into a full-blown entertainment force that are many viewers first choice when they decide what to watch in entertainment. That was Wall Street Journal Los Angeles Bureau Chief Sarah Krause. And that's what's news for this Tuesday afternoon. Today's show was produced by Pierre Bienneme with supervising producer Michael Kosmides. I'm Alex Osola for the Wall Street Journal. We're off tomorrow

for New Year's Day, but we'll be back to our normal schedule on Thursday. Thanks for listening. See you in 2025.