Hollywood Engages in Full-Scale Conflict Amidst Pandemic Fallout and Streaming Revolution

by Michael Nguyen
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streaming revolution

To witness the current atmosphere of hostility permeating Hollywood, one need only observe Ron Perlman’s response to reports suggesting that studios were deliberately prolonging a strike, jeopardizing the livelihoods of writers and potentially resulting in them losing their homes.

Ron Perlman, the commanding actor known for his role as “Hellboy,” leaned into the camera during a now-deleted Instagram live video to express his anger. “Listen to me, you [expletive],” Perlman exclaimed. “There are numerous ways to lose your house.”

Three years after the pandemic brought the film and TV industry to a standstill, it has once again ground to a halt. However, this time the industry finds itself embroiled in a bitter battle over the disruptive impact of streaming on the economics of entertainment—a disruption that was expedited during the pandemic.

In the midst of the ongoing writers’ strike, joined by tens of thousands of members from the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA), Hollywood has been thrown into turmoil. As striking actors and writers mobilize to protest at studio lots and streaming service headquarters, Matthew Belloni of Puck Magazine aptly described the situation as “the town burning to the ground.”

Fran Drescher, President of SAG-AFTRA, passionately addressed the strike during a press conference, stating, “You cannot expect the contract to remain unchanged when the business model has undergone such significant transformations. We refuse to make incremental adjustments to a contract that no longer reflects the current realities imposed upon us by this new business model.”

She added with a sense of urgency, “What are we doing? Rearranging furniture on the Titanic?”

Disaster had previously loomed over Hollywood when the COVID-19 pandemic shuttered movie theaters, emptied TV studios, and brought production to a halt in March 2020. The industry is still in the process of recovering. Only recently did one of the major film productions disrupted by the pandemic, “Mission: Impossible – Dead Reckoning Part One,” reach theaters. However, its opening, though significant, revealed that pre-pandemic levels of success have yet to be fully restored, with box office revenues remaining approximately 20-25% below their pre-pandemic levels.

Bob Iger, CEO of Disney, acknowledged the challenges faced by the industry, stating, “We have discussed the disruptive forces impacting this business and the various challenges we face in recovering from the ongoing effects of COVID. This is the worst possible time to add further disruptions.”

While many of the demands made by SAG-AFTRA and the Writers Guild of America (WGA) are long-standing, the current dispute gained momentum during the chaotic days of the pandemic. As studios hurriedly developed their own streaming platforms to compete with Netflix, a digital land rush towards streaming ensued. Subscriber growth became the primary focus.

Rahul Telang, a professor at Carnegie Mellon University and co-author of “Streaming, Sharing, Stealing: Big Data and the Future of Entertainment,” believes that the current situation was inevitable due to the disruptive nature of streaming. He explains, “The entire business was bound to be disrupted by what is happening right now. Naturally, they are demanding their fair share. However, determining what is fair requires transparency regarding the sources and allocation of revenue. Until this issue is resolved, it will continue to arise.”

The last time screen actors and writers simultaneously went on strike was in 1960. That strike resulted in significant advancements, such as the establishment of royalty payments (later known as residuals) for film and TV show replays, among other crucial protections. If that strike represented the dawn of television, this one is a reflection of the streaming era.

However, streaming platforms, especially those that guard their audience metrics closely, lack an easy measurement comparable to box office earnings or TV ratings for establishing residuals—a crucial component of actors’ and writers’ income. SAG-AFTRA is seeking a small percentage of subscriber revenue, with data measurement entrusted to an independent third party, Parrot Analytics.

The Alliance of Motion Picture and Television Producers, which negotiates on behalf of the studios, has yet to agree to this proposition. However, they claim to have offered actors “historic pay and residual increases,” along with pension contributions and other safeguards.

Meanwhile, actors are sharing their meager residual payment statements for streaming hits. Kimiko Glenn, known for her role in Netflix’s “Orange Is the New Black,” posted a clip showing residual payments totaling a mere $27.30.

Actor Nachayka Vanterpool, standing on the picket lines, highlighted the impact of this shift, stating, “In the past, you could work on a broadcast show, and the residuals would sustain you throughout the year. But with the advent of streaming, you receive 20-cent residual checks. It takes a toll.”

It increasingly appears that everyone has suffered losses in the “streaming wars” that intensified during the COVID-19 pandemic. As Wall Street shifted its focus from subscription numbers to profitability, most media companies experienced declines in their stock value. The message from Wall Street became clear: Show us the profits.

Simultaneously, the accelerated migration to streaming has hastened the decline of traditional television and its ad-based revenue. Analysts, including Michael Nathanson of MoffettNathanson, anticipate a “scary” second half of the year for media companies as they confront a fragmented entertainment landscape.

To mitigate the impact, many studios have resorted to cost-cutting measures. Over the past year and a half, companies such as Disney, Warner Bros. Discovery, and Netflix have all implemented workforce reductions. Achieving profitability through streaming has proven to be elusive. Disney states that Disney+ will reach profitability by fall 2024, while Warner Bros. Discovery aims to make money from its streaming service, Max, this year despite having canceled finished productions to reshape its strategy.

Many industry insiders are now preparing for an extended work stoppage that, if it continues into September, would significantly disrupt the fall TV schedule and the film festivals—Venice, Telluride, and Toronto—that traditionally serve as launching pads for awards season contenders. Drescher expressed her disbelief at the considerable gap between her union and the Alliance of Motion Picture and Television Producers (AMPTP).

Ronny Regev, author of “Working in Hollywood: How the Studio System Turned Creativity into Labor,” predicts that this strike could mirror the 1960 stoppage, in which actors reached a deal relatively quickly while the writers’ strike continued. However, Regev acknowledges that the dynamics have changed significantly due to the involvement of conglomerates with diverse business interests. He questions whether figures like Amazon chairman Jeff Bezos genuinely care about the outcome.

There are notable differences that work in favor of the writers this time. In 1960, the strike led by SAG (whose president at the time was the future Republican president Ronald Reagan) faced fierce opposition from other guilds, including the International Alliance of Theatrical Stage Employees (IATSE), which represents below-the-line crew members. However, this time, actors and writers enjoy near-universal support across the guilds. Notably, IATSE is scheduled to negotiate its own new contract next year.

Matthew D. Loeb, President of IATSE, emphasized the urgency of the situation, stating, “This critical moment cannot be overstated. The actions taken now will shape the future of labor relations in Hollywood and beyond. Their fight today foreshadows our fight tomorrow.”

In retrospect, Ron Perlman expressed regret for the intensity of his earlier remarks, calling on studio executives to demonstrate a degree of humanity. He stated, “It cannot be solely about your fancy car or your stock prices. There needs to be dignity if we are to hold up a mirror that reflects the human experience—something that actors and writers do.”

Contributions to this report by Aron Ranen.

Follow AP Film Writer Jake Coyle on Twitter at: http://twitter.com/jakecoyleAP

Frequently Asked Questions (FAQs) about streaming revolution

What is the cause of the ongoing strike in Hollywood?

The strike in Hollywood is primarily a result of the disruptive impact of streaming on the entertainment industry’s economics. It stems from the rapid advancement of streaming during the pandemic, which has upended traditional revenue models and raised concerns about fair compensation for writers and actors.

What demands are being made by the striking unions?

The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) and the Writers Guild of America (WGA) have longstanding demands related to residuals and fair compensation. SAG-AFTRA seeks a percentage of subscriber revenue, measured by an independent third party, while the WGA aims for improved working conditions and fair compensation in the streaming era.

How has the pandemic affected Hollywood?

The pandemic caused widespread disruption in Hollywood, with movie theaters closing, TV production halted, and a significant impact on box office revenues. Despite ongoing recovery efforts, the industry continues to face challenges, including reduced box office returns and the accelerated shift towards streaming platforms.

How are streaming platforms impacting the entertainment industry?

Streaming platforms have disrupted the industry by changing traditional revenue models and introducing new challenges for compensation. They offer less transparency regarding audience metrics, making it difficult to establish residuals for actors and writers. Additionally, the emphasis on subscriber growth has led to intensified competition and increased pressure on studios to develop their own streaming services.

What are the potential consequences of the strike?

If the strike persists, it could have significant consequences for the fall TV schedule, film festivals, and the industry as a whole. The disruption could delay the release of TV shows and impact the launch of awards season contenders. The strike also raises important questions about labor relations and the future of the industry in the streaming era.

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