The end of the SAG-AFTRA strike is just the beginning of a transformative era for the entertainment business.
The comedown from the heady days of the streaming wars (which, if not truly over as some have declared, are at least de-escalating somewhat) is still very much in progress, and it’s unclear exactly what the new equilibrium will look like when the dust settles.
Still, there are signs to be read. First and foremost, the Great Content Contraction is coming, and in some ways has already begun. Disney recently announced it plans to cut its content spend to $25 billion in fiscal year 2024, a far cry from the $33 billion it originally planned to spend in 2022. That figure ultimately ended up at less than $30B and dropped to $27B for 2023, interim CFO Kevin Lansberry said on the company’s fiscal Q4 earnings call.
It’s important to remember that this contraction began before the strikes and would have happened without them. But the lengthy work stoppage also gave the studios ample time to cull their slates and apparently decide there were plenty of deals and titles they could live without.
Indeed, multiple reports have indicated many writers’ overall deals will not be extended to compensate for the strike, that projects paused by the shutdown are being scrapped and that new TV deals and orders have been scarce. The new cost-consciousness professed by studio executives on earnings calls is taking hold and will reshape the Hollywood landscape in the months and years ahead.
That means less content flowing through the pipeline — the days of 600 scripted shows a year aren’t coming back anytime soon, and the theatrical business, already shrunk by COVID, will likely remain diminished — and therefore fewer jobs to go around in the industry. Many writers and actors will likely not benefit from the changes they struck to secure as the industry undergoes substantial shrinkage.
Even those who continue to find employment may find a limited financial upside to the reforms won by the strikes. The new performance-based streaming residual bonus formula for the Writers Guild creates a narrow window for success, requiring a title to achieve the equivalent of viewership by 20% of an SVOD platform’s domestic subscriber base.
It’s difficult to determine how many titles released in the past few years would have earned this bonus, but it seems likely very few titles will get across that 20% threshold. One caveat-filled analysis by the Entertainment Strategy Guy, for instance, found only about 14% of first-season streaming shows released between 2021 and 2023 would qualify.
To be clear, this doesn’t mean the hard-won changes now enshrined in the guild contracts aren’t worth implementing. The industry’s workers desperately needed new structures in place to create a more sustainable economic model for the streaming era, and it was no small feat by the guilds to establish wholly new formulas that can be built upon in later negotiations.
In fact, this show of labor strength may prove to be the strikes’ greatest legacy, and perhaps an engine for long-term positive change to emerge from this painful era of Hollywood history.
For one thing, one would imagine — or at least hope — that the prolonged work stoppage and resoluteness of the guilds has awoken the studios’ leadership to the numerous issues with the dysfunctional negotiation process.
Even Warner Bros. Discovery CEO David Zaslav, long framed as Hollywood’s resident mustache-twirling villain, now admits the WGA was “right about almost everything” — a sign that the 148-day writers strike could have ended much sooner if the studio chiefs had gotten involved earlier. But regardless, with the new economic models now in place, it’s likely that improving them will be a much easier process than creating them practically out of whole cloth.
Could this also mean the studios will be less resistant to compromise in negotiations with the below-the-line crews’ union IATSE next year? The umbrella guild for Hollywood’s craftspeople — from editors to costume designers to grips and beyond — will see its contract with the AMPTP expire in 2024, on the heels of deep-seated unrest within the union that very nearly led to a strike two years ago.
Those negotiations will not be easy. On top of the streaming-related issues raised by the WGA and SAG-AFTRA, which will surely be major points of contention, IATSE members have extensive concerns over working conditions in production that were not even addressed by this year’s strikes.
Meanwhile, more and more disgruntled workers, particularly in the visual effects and animation sectors, have been voting to unionize with IATSE this year, bringing their own concerns to an already crowded table.
But if these workers can use their considerable leverage to win significant concessions from the studios, and if the studios prove willing to work to avoid another prolonged production shutdown, there is potential for far-reaching, positive transformation within the entertainment business. As the rising tide of labor activism in various U.S. industries has shown, workers are beginning to tip the balance of power back in their favor, though the long-term impact has yet to become clear.
As far as entertainment goes, no deal is perfect, but the WGA and SAG-AFTRA contracts have shown legitimate progress is possible. And the Hollywood that ultimately emerges from this chaos may be far diminished from the pre-strike, peak TV era but could in the long run be all the better for it.