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Movie studios look to cut production amid supply chain woes

Yahoo Finance entertainment reporter Allie Canal examines movie studio sets' decisions to cut production costs amid inflation and supply chain concerns and how major studios are budgeting their content for the rest of 2022.

Video transcript

RACHELLE AKUFFO: The entertainment industry is feeling the pressure of supply chain turmoil, with studio execs telling the Hollywood Reporter that production sets are at least 15% more expensive to make this year than they were just a year ago. Well, here to discuss this is Yahoo Finance's very own Alexandra Canal. Allie, that price tag going up.

ALEXANDRA CANAL: Yes, it is, Rachelle. Not even Hollywood is immune to inflationary pressures, supply chain constraints. The Hollywood Reporter did break down what's hitting the entertainment industry most right now. And the biggest issue is building some of these sets and soundstages. If we take a look at where price increases are at, we see lighting rigs, 85K now. It was half that cost two years ago, according to the report. Same with sheets of plywood and electrical equipment.

Not only that, but the amount of time that it takes to fulfill these orders for some of these items has quadrupled. For example, lighting orders used to take two to four weeks. Now some purchasers are having to wait up to 16 weeks. So we're seeing the supply chain drive up costs, increase wait times. But the demand for filming is still there. The show must go on, as they say, so executives, studio heads, they're getting a bit creative with volume discounts, clustering film locations, and really utilizing those tax incentives.

So working through the difficult economic times in order to meet the demand because the demand is certainly there. If we take a look at some of the biggest production studios, Disney plans to spend $33 billion, Warner Bros Discovery, $23 billion, Netflix, between $17 and $18 billion. And those numbers should only go up moving forward amid inflation.