Author: Brian Kingman
The Hollywood entertainment industry has been hit by coordinated strike action by the Writers Guild of America (WGA) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA). The principal issues are a dispute over compensation for artists, writers and other contributors and the use of artificial intelligence (AI) by content producers and production studios.
The current stalemate between unions and industry has broader consequences and may deliver a significant blow to its bottom line should action continue for an extended period. Media business leaders and production companies need to make a realistic appraisal of forecasted financial losses and their production risk exposure to navigate a challenging period.
The multi-billion-dollar Hollywood entertainment industry has been hit by dual-union strike action for the first time since 1960. Led by thousands of actors and scriptwriters, the strike has brought the production of several high-profile projects in Hollywood to a standstill.1 It started with an initial outpouring from WGA in May, followed by a protest and calls for collective action by SAG-AFTRA.2
Economic fairness, outdated contract terms and maintaining reasonable living standards in line with an evolving media business are some of the concerns being debated.
As things stand, it is difficult to predict how events will pan out, and a quick resolution to the conflict seems unlikely. However, a tentative deal struck between the Directors Guild, studios and streamers to establish a new residuals formula and preconsultation for generative AI content may provide a template to resolve the current deadlock between studios and WGA/SAG-AFTRA members. Profit participation to bring streamers in line with other major players could provide a way forward if it offers a sustainable operating model.
A lack of programming content may be the deciding factor to motivate all parties to come back to the negotiation table. With the strike passing its 114th day — surpassing the 2007-2008 strike that lasted 100 days) — recent reporting suggests that there's currently no clear path to the parties striking a deal that would deliver a workable resolution, and the cost to the industry continues to mount.
Optimism remains, however, as the unions presented a preview of the issues each side intended to bring back to the table and formal talks resumed on August 11, 2023 with a general feeling that "everyone is trying to step up and make a resolution."3