As dark clouds hung overhead, hundreds of striking screenwriters picketed along Sunset Boulevard outside the company they blame for bringing the remorseless economics of Silicon Valley to Hollywood: Netflix.
Among the picketers on Thursday was Eric Heisserer, whose screenwriting credits include the 2016 sci-fi film Arrival. Like his fellow strikers, Heisserer said the streaming revolution launched by Netflix in 2007 had made it difficult for all but the most successful writers to make a decent living.
The streaming model “guts the middle class and rewards the top”, said Heisserer. “It’s highly exploitative.”
Heisserer is one of the 11,500 members of the Writers Guild of America who went on strike on Tuesday following the collapse of talks with the major studios and streamers over a new three-year contract. The WGA accuses the studios of fostering a “gig economy” that could lead to screenwriting becoming “an entirely freelance profession”.
The group representing the studios in the talks rejected these claims on Thursday. “Employment as a writer has almost nothing in common with standard ‘gigs’ jobs,” said the Alliance of Motion Picture and Television Producers, a group that includes major studios such as Disney, Warner Bros and Universal along with streamers Apple, Amazon and Netflix.
It has been an acrimonious start to the first Hollywood strike in 15 years. Picketers fanned out this week across dozens of locations in Los Angeles and New York carrying signs with slogans such as “We wrote the show you’re bingeing tonight” and “We write the stuff streams are made of”.
Some industry watchers are expecting a lengthy strike. There is general agreement in Hollywood that the model for paying writers needs to be updated for the streaming era, but the WGA and the studios have staked out opposing approaches. The two sides are arguing over issues as varied as the potential role of AI in writing scripts to the size of royalties for streaming programmes.
While streaming has led to a rise in the number of programmes produced, many writers are earning less now than they did in the traditional TV business. Streaming series are often eight to 10 episodes long — far shorter than the 22 scripts in a typical season of traditional US television, long enough to provide work for a writer for a full year.
Another key disagreement is over the rise of the “mini room” — small groups that produce scripts for shows that have not been greenlit. The WGA is seeking a minimum number of staff in these teams, a proposal that the AMPTP has rejected as a “hiring quota that is incompatible with the creative nature of our industry”.
The strike comes as most of the traditional entertainment groups — Disney, Warner Bros, Paramount and NBCUniversal — are facing intense pressure to slash costs after sinking billions into building their streaming services. Now investors are urging them to push for profitability in streaming to offset their rapidly declining traditional TV revenues.
Bob Bakish, chief executive of Paramount, on Thursday said there was a “pretty big gap” between the two sides in the negotiations, but downplayed the financial impact on the company. “Obviously we’ve been planning for this”, he told analysts. “We have a lot of . . . content in the can. With the exception of things like late-night [television], consumers really won’t notice anything for a while”.
A better deal for writers would cost media companies between $250mn and $350mn per year, according to Moody’s analyst Neil Begley, who warned that some weaker media companies “could see their credit suffer” if the walkout carried on for several months.
This expense could balloon to as much as $600mn a year if the Directors Guild of America and the Screen Actors Guild — whose contracts also end this summer — negotiated a better pay agreement, he estimated.
However, studios may also be able to cut costs in the event of a long strike by using force majeure clauses to get out of expensive deals with producers or showrunners. “Some producers who got good deals in the streaming boom era and were overpaid” could be released through force majeure, noted one executive.
Rich Greenfield, an analyst at LightShed, said a prolonged strike could even boost profits for the major streamers because they would not incur expenses for programming that had not been made — similar to the impact when the pandemic halted production.
This could be especially helpful for entertainment groups carrying heavy debt loads, such as Warner Bros Discovery and Paramount.
A prolonged strike “could lead to notably better than expected streaming profitability”, Greenfield said. “Multibillion-dollar operating losses could come in significantly better than expected.”
The longer the strike goes on, the greater the advantage for streamers capable of sourcing international shows — namely Netflix. “An extended strike that lasts three-plus months should meaningfully advantage Netflix,” Greenfield wrote in a research report. He noted that the Korean series Queenmaker and the Thai film Hunger had both made Netflix’s top 10 list recently.
Using international content to fill gaps left by the US writers strike is unlikely to win friends with the WGA, whose members say they have been short-changed in the streaming era.
A common lament is that Hollywood lacks a leader with the power to force through a compromise, a role once filled by 20th century moguls such as Lew Wasserman, the powerful head of MCA who transformed the movie industry.
On the picket lines, some writers said they were happy to play the long game in a fight that they considered to be “existential”.
Melissa Marlette, who has been a writer for about five years in a 15-year career in Hollywood, said she recently had to take a side job in retail to supplement her income. She was willing to picket as long as it took. “Everyone’s already broke, so we can wait,” Marlette says.
