Turbulence in Tinseltown: Hollywood Unions’ Tug-of-War with Studios & Streamers
June 6, 2023
The landscape of Hollywood is undergoing a seismic shift, characterized by escalating tensions and high-stake negotiations in the creative industry. On an unassuming Sunday, the Directors Guild of America (DGA) reached a tentative three-year agreement with major film studios and streaming platforms. However, this seemingly promising development doesn’t encompass the entirety of the entertainment industry. The Writers Guild of America (WGA) and Screen Actors Guild (SAG) remain in an impasse, steadfastly holding their positions. Six weeks into their strike, the writers show no signs of relenting, while actors are poised to potentially initiate their own labor action if a satisfactory deal isn’t struck by June 30.
The Crux of the Conflict
But what is the cause of these escalating tensions? The conflict revolves around wages, benefits, and royalty payments, notably global streaming residuals. The role of Artificial Intelligence (AI) has also become a contentious issue with the unions demanding safeguards to prevent AI from usurping their jobs. Furthermore, writers are raising their voices against tech giants like Netflix (NFLX) who, according to them, are undermining the creative process by offering shorter contracts and lower wages. The negotiations are under additional strain as many studios grapple with substantial losses from their streaming ventures, making them wary of commitments that could further impact their financial health.
Repercussions of the Strike
The ramifications of these negotiations are already visible and palpable. The ongoing WGA strike has stalled numerous high-profile productions. The final season of Netflix’s ‘Stranger Things’, an HBO (WBD) ‘Game of Thrones’ prequel, and Disney’s (DIS) ‘Thunderbolts’ and ‘Blade’ have all been placed on an indefinite hiatus. An actors’ strike could potentially cause a larger disruption in Hollywood, putting additional pressure on companies struggling to maintain their streaming services and television programming schedules. The list of studios navigating this tumultuous landscape includes Amazon (AMZN), Apple (AAPL), NBCUniversal (CMCSA), Paramount (PARA), and Sony (SONY), all under the umbrella of the Alliance of Motion Picture and Television Producers.
The Future of Hollywood
Looking ahead, the studios and streaming platforms may not feel a pressing need to compromise, according to the Entertainment Oracle, an analyst at Seeking Alpha. The ongoing strike could present an opportunity for them to extricate themselves from unprofitable long-term deals. However, this approach could prove perilous in the long run. If the deadlock continues, the studios might pivot towards reality television, unscripted shows, or content sourced internationally. Nevertheless, the financial repercussions of an enduring strike are inevitable. Moody’s has cautioned that a prolonged strike could potentially downgrade the credit ratings of vulnerable media companies. Paramount CEO Bob Bakish further adds uncertainty, stating that the fallout would “ultimately depend on the duration of the strike”.