Trump Tariffs Timing Couldn’t Be Worse for Hollywood

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As a gamer, I excitedly announced my own “Victory Day” yesterday afternoon. I unveiled a comprehensive plan of levies, which I believe will tip the scales in favor of fair global trading, and in my terms, make our gaming setup the ultimate money-maker.

It’s clear that many entertainment moguls have been closely monitoring the events unfolding, and they are far from satisfied with their current financial situation.

In contrast to the media industry not being reliant on physically imported merchandise, a significant number of its major advertisers do, and it’s these ad revenues that are now experiencing strain. This revelation is echoed by various insiders from both the buying and selling sectors, as reported by The Hollywood Reporter.

Some significant advertising sectors such as automotive, consumer goods, and food & beverages, are reconsidering their investment plans due to the upcoming tariffs and the prospect of a full-blown trade war. These businesses are carefully evaluating how these changes might affect them financially. Additionally, there’s a concern about a potential drop in tourism from Canada and Europe, which could weaken the travel industry, with airlines and hotels fighting for travelers’ money.

One major media figure comments that we’re facing a rather grim situation, as things stand now, the existing pricing model is manageable, but the forecast for the rest of the year doesn’t look very promising.

As a follower, I can’t help but feel the ripple effects of the tariffs announced by Trump. From essential groceries and vehicles to electronics and raw materials, everything seems destined to be affected when these tariffs take hold. The stock market futures took a dramatic dip following his announcement, which is a clear sign of the uncertainty that looms ahead.

Over the last few gaming sessions, industry expert Brian Wieser and the analytics giant Magna have both scaled back their predictions regarding ad growth by 2025, as seen from my perspective in the gaming world.

Wieser and Magna have revised their predictions for 2025, with Wieser expecting a decrease from 4.5% to 3.6%, and Magna seeing a drop from 4.9% to 4.3%. Both experts foresee that the advertising industry will expand; however, this growth will represent a significant decline compared to 2024. Notably, almost all of this anticipated growth is attributed to tech titans such as Google and Meta.

In December, Wieser discussed the uncertainties surrounding 2025 due to the U.S. federal election results that seemed unfavorable for the advertising industry based on the incoming administration’s stated policy leanings. Now, three months into the year, it appears that there are indeed more negatives on the horizon, such as increased instability in trade policies and a greater risk to supply chains and business decisions than initially anticipated.”

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“Three months into 2025, Wieser’s December concerns about the advertising industry due to the U.S. federal election results seem justified. The situation has become more complicated with increased volatility in trade policies and a greater threat to supply chains and business decisions than initially expected.

Vincent Létang, Magna’s executive VP of global market intelligence, stated that the current drop in confidence – which we hope is just temporary – has negatively influenced the advertising market, causing a revision of the 2025 growth forecast for the U.S. Although overall ad spending is predicted to increase by mid-single digits, digital media ads are expected to continue growing at a high-single-digit rate. In contrast, many traditional media channels might struggle with flat or declining ad revenues this year.

Even titans of technology aren’t exempt from this trend. In a March 31 report by Michael Nathanson at MoffettNathanson, it was suggested that the reigning champion of ad-based streaming video might experience a slowdown in its growth rate.

As the platform becomes more popular among older audiences, increasing its earning possibilities, there’s a risk that the surge of ads available across the wider Connected TV market could lower ad prices. This decrease might counterbalance the profits from the older demographic growth. Moreover, a less robust economy may lead to reduced advertising budgets overall. Consequently, we now estimate YouTube’s advertising income will increase at a rate of low double digits in the upcoming years.

Traditional media firms, such as those in the entertainment industry, are currently experiencing a surge of concern about advertising. A modest, low double-digit increase in growth would be considered a significant achievement for them.

Contrary to the pessimistic outlook shared by company leaders and marketing experts, David Karnovsky from JPMorgan stated in his March 28 report that there’s been no sign of weakness in the advertising market yet, with local TV being a notable exception due to its heavy dependence on automotive ads.

Instead of the negative perspectives shared by CEOs and ad analysts, David Karnovsky from JPMorgan stated that there’s been no evidence of weakness in the advertising market as of his March 28 report, with local TV being a notable exception due to its strong connection with automotive ads.)

Despite the turmoil affecting many traditional media firms, there’s a glimmer of hope in their focus on sports programming. This area appears relatively immune to chaos due to sustained demand. Both industry insiders (buy-side) and market analysts (sell-side) agree that the appetite for live sports remains robust.

According to Bank of America analyst Jessica Reif Ehrlich’s March 28 report, sports continue to thrive, despite the ongoing effects of increased supply in the streaming video market. She also mentioned that the streaming market is still trying to adapt to Amazon’s decision last year to introduce ads on Prime Video, leading to a significant increase in available content.

As a gamer, I’m seeing a consistent high demand for sports on both traditional broadcasts and streaming platforms. News, especially with higher ratings, is also holding strong, although pre-emptions are the only hurdle in its growth. Linear entertainment is doing well, with scatter pricing remaining above the upfront price. In summary, the money seems to be shifting from cable entertainment towards news/sports for wider reach and Connected TV (CTV) for precise targeting. Interestingly, CTV has experienced lower Cost Per Thousand (CPMs), but it seems like this trend has stabilized now.

Moreover, the synchronization of tariffs and economic slump happens to be particularly unfortunate for the entertainment industry, as they are about to engage in their annual negotiations with media buyers over the next few weeks. These annual negotiations, known as upfronts, involve media companies committing billions of dollars on advertising to secure optimal rates and top-tier programming.

One executive in the field of entertainment advertising anticipates that this year’s pitches will emphasize sports and live events more heavily as a strategy to address wider market concerns. Additionally, they forecast securing agreements from buyers to invest in certain entertainment content (specifically streaming) to ensure premium access to top-tier sporting events. For instance, NBC plans to offer next year’s Super Bowl, Winter Olympics, and the resumption of the NBA on their network.

A source from the buy-side is indicating that clients are starting to consider where they might direct their purchases if the economy worsens or if tariffs affect product options. It’s expected that spending on sports will continue, with entertainment expenditures possibly becoming more strategic and precise. With Goldman Sachs increasing the 12-month risk of a recession to 35 percent on March 31, some brands might decide to shift more of their budgets towards the flexible market, where prices and availability are adjustable.

As a gamer, I’m keeping my fingers crossed that the rumored threat by HHS Secretary Robert F. Kennedy Jr. to ban pharmaceutical advertising doesn’t materialize. For now, it’s just a promise, but if it becomes reality, it could change the gaming landscape as we know it.

Karnovsky reported that the executives he consulted expressed no worry regarding the matter, with a few mentioning that opposition to a ban could be strong, and in an extreme situation, there might be increased demand as a substitute (particularly in sports).

As a gamer, I know well enough that relying solely on sports isn’t enough to keep a media company afloat during an economic slump. As the buy side source pointed out, when tough times hit, advertising budgets are usually the first expenses to be cut. It’s the less tech-savvy entertainment companies that will probably feel the squeeze first.

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2025-04-03 01:55