The strikes are over, but Hollywood’s lost year is a turning point for the industry. Six months after pickets first formed outside the gates of the iconic studios, the studios can finally return to work. And sets inactive since last spring are ready to reopen, welcoming thousands of actors and film crew members.
The agreement brought palpable relief among studio executives who were desperate to salvage the current television season, on the eve of awards shows, and with stars’ appearances at film festivals and premieres of what will be 2024. on platforms. On the other hand, union leaders praised the proposed three-year deal, saying it would make acting a more sustainable career.
Losses
AMC Theatres, the world’s largest movie theater operator, lost $561 million in its latest quarter as revenue collapsed, a new blow to the industry in the wake of the COVID-19 pandemic. And the industry doesn’t expect to recover quickly. And Hollywood won’t be the same as it was before the shutdown either. Industry veterans, including executives, talent agents and producers, reveal a deep crisis in the movie business, with a permanent migration of consumers to streaming. Some even point out that 2023 will be remembered as a lost year of production and a turning point in the industry.
“The pockets of the studios are hit. We are definitely past the peak of the easy money that fueled streaming platforms. And there will no longer be the same volume of content created and ordered, and that means fewer jobs for talent and for everyone,” lamented lawyer Robert Schwartz, who represents several Hollywood figures.
Even before members of the Writers Guild of America went on strike in early May, there were signs of a major contraction in the industry. Walt Disney Co. earlier this year began laying off thousands of employees and cutting expenses by several million dollars, a harbinger that the nearly decade-long boom in television production, in a race to launch new streaming services, a period known in the industry as “peak television” had come to an end.
Scenery
Last spring, producers began scaling back orders for TV shows and movie projects as Wall Street demanded streaming profits. And the “twin strikes” accelerated the trend: when members of the Screen Actors Guild-American Federation of Television and Radio Artists joined the writers’ strike in mid-July, the fictions fell almost completely. An estimated 45,000 jobs have disappeared from payrolls in the entertainment and sound recording industry since May, according to the U.S. Bureau of Labor Statistics.
It is not yet clear what shape and size the recovery will ultimately take. Some productions got up and running quickly, while others might not return for weeks, if at all. Caution prevails in studies. “It won’t be a matter of flipping a switch,” said David Kramer, president of United Talent Agency. “There are many different forces at play that will impact the volume of the business.”
The SAG-AFTRA television and theater negotiating committee estimated the value of the new contract between producers and artists at more than $1 billion, which includes higher salaries, increased contributions to the guild’s pension and health fund, bonuses for successful streaming shows and protections against the threat of artificial intelligence, issues that many members considered existential.
The proposed contract will go a long way toward “addressing the impact the broadcast business model has had on members,” SAG-AFTRA chief negotiator Duncan Crabtree-Ireland concluded. “When we look back… we will say that this [negociación laboral] “It was a moment that really changed several things in the industry in a positive direction,” he added, noting that most of the industry’s workers are “middle class.”
Budget
The Alliance of Motion Picture and Television Producers, which negotiated on behalf of Disney, Netflix, Amazon Studios, Warner Bros. Discovery, NBCUniversal and others, noted that the agreement represents “the largest contract-on-contract adjustment in the union’s history, including the largest increase in minimum wages in the last forty years, and a new business model for streaming programs.”
But higher labor costs (concessions obtained by writers and actors through months of negotiations with the studio alliance) could weigh on spending decisions and cause a contraction in production, specialists logically point out. The companies had already promised Wall Street that they would be more disciplined in their spending after years of investing billions of dollars in programming for streaming services to compete with Netflix. Disney, Warner Bros. Discovery, Paramount Global and others have decided to sharply reduce spending and reduce debt from acquisitions.
Executives confirm that they must reevaluate their agendas and priorities. Some are waiting for what next year brings: they are betting on a stronger television advertising market with more income, with some platforms permeating the inclusion of ads.
“The strike simply added more cost pressure to a business that was already in jeopardy,” said Rich Greenfield, partner and media analyst at research firm LightShed Partners. “The harsh reality for actors, writers and all these unions is that there is too much content and it does not generate enough value. With the cost of production, studios are going to cut back on their projects,” Greenfield summarized.
Programs
Certainly the production of television shows has probably peaked: Last year, television networks and streamers collectively produced a record 599 shows, according to FX Networks’ annual analysis. During the first half of this year, before the full impact of the strikes, it had already been cut by approximately 10%, compared to the first six months of 2022. And the number of series will decrease by approximately 20% more next year, placing the total at approximately 480 shows.
“There needs to be a tightening of the belts because the previous level of production was never sustainable,” Schwartz noted. An example is the cut that Warner made to the $250 million contract with director and producer JJ Abrams after the merger with Discovery.
And the new level for the most expensive productions is between 5 and 7 million dollars per episode, 20% less than the previous average, when shows like “Game of Thrones” could be above 20 million dollars. That budget today is for an entire season.
In short, film executives are expected to give the green light to fewer projects, largely avoiding mid-level budgets, between 30 and 60 million dollars, series that do not quite tip the scales. “Executives are looking for shows less like HBO’s epic Game of Thrones, with fire-breathing dragons, and more like Netflix’s modest The Lincoln Lawyer, which was among the most viewed for a month,” showrunner Marc revealed. Guggenheim. It will be as the producer says, a new era of fiscal order.
by RN
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