Hollywood Scores Own Goal as Studio Bosses Prepare for the Coming Era in the Global Streaming Wars

Hollywood's Own Goal

The historic strike action of the WGA and SAG-AFTRA highlights the diverging interests of Studio-owning conglomerates and the American-centric unionised talent concentrated within Los Angeles County.

Seasoned media executives know that the audience has little actual voice in what films and television shows the streaming platforms, distributors and cinema owners make available to the market.  What audiences want has always taken second fiddle to what media executives control and understand.  What they understand is how well a film or television show performed yesterday.  What they control is distribution. 

Historically, much of the content filling distribution pipelines globally were chosen and produced by people living and working somewhere around Los Angeles, California.  That concentration of media decision-makers has secured Los Angeles county as the number one production market in the world and made Hollywood synonymous with a global industry.

Hollywood is also well known for using other peoples’ money to produce content while keeping as much of the revenues generated by that content for themselves.  This equation is demonstrable.  Global production costs for commercial content distributed by large media conglomerates are estimated at US$250 billion last year.  But according to international accounting firm, PwC, global revenues to the distribution and delivery end of the industry are set to top US$2.5 trillion by the end of this year.

This material disparity between those who produce the content and those who sell it is at the heart of yesterday’s action by SAG-AFTRA to join the WGA on the picket lines. 

Fran Drescher, President SAG-AFTRA
Fran Drescher, President of SAG-AFTRA, during the 65th Grammy Awards in February 2023. (Credit: Amy Sussman/Getty).

There was once a key argument within the US headquarter offices of the “Media Majors” that US dollars, the US content market and Hollywood were all components of a primarily US industry.  Americans, after all, comprise the world’s most lucrative single market for commercial content.  So why would writers and actors primarily based in Los Angeles County strike against the very Studio bosses that keep them employed.

The reason may be that the Studio bosses are no longer focused on Los Angeles.  The once key argument has long evaporated, at least within the confines of those headquarter offices.  Over the past ten years, most of those headquarter offices have become concentrated not in Los Angeles County, but in New York City.  Over that same period of time, most of the industry’s revenues have also shifted.  The vast majority of global revenues paid to media conglomerates by consumer audiences for access to content, and by advertisers for access to consumer audiences, are now generated outside the United States. 

Bog Iger, CEO of Walt Disney Company.
Bog Iger, Disney CEO. One of the world’s highest paid executives with a compensation package of US$27 million a year. (Credit: Shannon Michaelson)

For writers and actors based in Los Angeles, the strike is about that material disparity and a fight to make things a bit more equal.  But for Studio bosses, this may be about something altogether different.

Hollywood’s Angle

Until very recently, content production and distribution was a game played within a very tight circle of producers, studio (read distribution) executives and financiers.  Most of the decision-makers lived and worked around Los Angeles at least part of the year.  Production infrastructure, highly experienced local production crew and a friendly government made shooting content within arms’ reach of the decision-makers in LA highly convenient.  The lifestyle didn’t hurt either.

Film production, not necessarily distribution, is a major sector of California’s economy.  Government tax incentives favouring large producers/distributors help to solidify an already limited club of industry players.  According to the Entertainment Union Coalition, which includes SAG-AFTRA, the 656 film, television and streaming productions receiving tax credits since 2009 spent $23.2 billion in California.

On July 10, 2023, California’s Governor Gavin Newsom signed a 5-year extension to the State’s US$330 million per year Film and TV Tax Credit Program.  Progressively, the legislation also protects film and TV workers by establishing mandatory guidelines around the use of firearms and ammunition on productions, establishes training requirements and safety standards for prop masters and armorers.

That move is in the aftermath of Halyna Hutchins death on the New Mexico set of Rust in 2021, where she was the cinematographer.  The move is meant to help maintain California’s significance as the most important place for film-makers and television producers.


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But film-makers were the first creatives to find reason to shoot outside California.  Competition for limited soundstage space in LA together with an increasing supply of next-generation soundstages around London, Atlanta and various other locations (including New Mexico) made the temporary dislocation of LA-based actors, writers and senior production heads worthwhile.  Six to eight weeks away from home once a year was doable. 

At the same time, a rise of high-end television productions being shot in LA more than made up for any “footloose” film productions finding advantages “on location”.  Television productions are much longer-term affairs.  Five to eight months of shooting a traditional 25 episode season meant that most shows needed to be closer to home for top talent to do the work.  That has maintained Los Angeles county as the epicentre of global television production.

Serialised content is now the prevailing form of entertainment on streaming platforms, and an increasing number of “movie stars” are now taking roles in them. But LA’s role in a global business that is increasingly focused on revenues generated outside of the US may be seen by many CEOs and their shareholders as more burden than benefit.

Un-Coupling

To a lesser degree, London boasts similar attributes that make it the second busiest production market globally.  Large numbers of experienced writing, acting and production talent are concentrated around London, where much of the international distribution and finance deals are also struck. 

But London and LA have been joined at the hip for decades.  The same companies that decide which script receives the privilege of being transformed into a movie or television show have offices in both cities.  The same talent management groups and agents represent writers and actors that often work interchangeably within soundstages and back lots on either continent. 

The result of the WGA’s strike action in the US, now in its 11th week, is that many co-productions being shot in the UK are also being shut down.  Both distribution agreements and insurance on major film productions, including so-called “Completion Bonds”, are often unenforceable when senior talent (including writers) are on strike.  This can simply halt production altogether, as finance terms for the production that require such agreements and insurance are breached.  The prospect for new productions getting underway on either side of the Atlantic with British or international writers is now in serious doubt as member-actors of SAG-AFTRA join the picket line.

For television channels, streaming platforms and cinema owners, this means that new “studio” films and television shows, which are generally marketed six months in advance under an unspoken “Hollywood” brand will be unavailable to their audiences in the very near future.  If the complaints of the WGA and SAG-AFTRA are settled with the studios in the near-term, that may not impact much.  But a protracted strike in the US will require significant re-engineering of content production globally to compensate.

That may just be a pre-determined outcome.

Following the Money

Hollywood writers and actors have not joined forces to strike together against Studio bosses since 1960.  Back then, the arguments centred on movies and television shows being syndicated on television.  Writers and actors wanted a piece of the long-term revenues that syndication provided. 

A lot has changed since then.  Most notably, who those Studio bosses answer to today.  It is not necessarily to American shareholders and certainly not to American audiences.  Today, to a certain degree, they answer to a global collection of media markets, consumer audiences and international advertisers.  But it is to an increasingly concentrated collection of global shareholders that they are most sensitive to. 

Some of those shareholders have a larger agenda that includes using Hollywood as a model.  That model provides a blueprint for creating jobs and developing economies outside the United States and the UK.  It also offers a means to diversifying highly influential entertainment content away from American-centric stories and actors and re-shaping public opinion in their own image.


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One of the key issues facing the Media Majors, with their dependence on LA-based writers and actors, is that both the audiences they must serve and the shareholders they must please want new stories and new voices.

As a result, global investment and finance capital is already shifting its focus from US film and television production opportunities and into markets eager to meet growing demand for quality content from increasingly international audiences.  The managers of that investment finance capital include some of the largest pools of capital in the world.  Those managers are also shareholders in the publicly-listed media conglomerates that own most, if not all, of the studios now in conflict with LA’s version of Hollywood.

If one thing is certain, CEO’s listen to shareholders.  Increasingly, those shareholders are large private equity firms and sovereign wealth funds that also see ancillary investment opportunity in forging new production markets far removed from a unionised LA County that is already at maximum capacity. 

The business model of streaming platforms is evolving in the face of a resurgent box office and emerging Web3 delivery channels that increasingly cater to markets outside the US.  For the highest-paid CEOs on Earth, this means extending their strategic vision beyond the US.  The battle for a changing definition of “Hollywood” may become the defining engagement of the Streaming Wars. 

Studio bosses are in desperate need to widen production capacity globally and turn the world into Hollywood.  The most experienced writers and actors in the world could easily facilitate that.  It would mean being willing to travel, perhaps relocate, to teach, and to learn.  Instead, conflict may just give those Studio bosses the excuse they need to leave LA where it is.

The choice for writers and actors is to step forward, or to stand still. Notwithstanding the wisdom of California’s view on firearms in film, or the Unions’ rationale for strike action, LA’s version of Hollywood may just be shooting itself in the foot. 

4 Comments

  1. I don’t think anyone disagrees that creatives should earn more from their work. What I find interesting is that AMPTP has been saying the business model of residuals is broken (for a long time now). If a movie project is purchased by Netflix or Disney for streaming, it is purchased. The writer isn’t forced to sell the rights to them. He chooses to. He gets paid, movie gets made and seen, and the writer moves on the next. If Netflix then sells rights to another streamer, for theatrical, etc then the writer should get a percentage of that extra income (royalties, residuals, whatever). Netflix says they can’t provide the data to track that. BS, of course. But it comes down to what rights the writer signed away and what he kept. No one forces them to sell to Netflix. If the project is good, they would have other choices. If not …

  2. with all due respect, I disagree entirely. These strikes have happened because the major studios and streamers have tried to change the business model that writers and actors have depended on for their livelihood – a profit share based on the success on the content they create. The streamers refused to do this using the excuse that their success metrics are highly confidential. And the studios then jumped onto the same bandwagon, trying to us the same excuse for content shown on their streaming platforms. Scarlet Johannsen sued Disney over this and they settled with her for a large amount. Independent content producers – even the biggest TV production companies, some of which are owned by major studios, are facing exactly the same problem – their business model is based on earnings from profit shares. And without a profit share, there’s no incentive for an equity investor either. Without the creators – and I very mush include producers in this – there is no content. I expect the studios to back down and settle eventually (i’ve heard that many of them want to but Netflix and Disney are entrenched).

    • ARTICLE AUTHOR

      Dear Gavin. Do we really disagree?

      You make a correct point that Writers and Acting talent have legitimate, material grievances. The disparity in revenues is egregious; some might say obscene. The licensing terms being offered by Netflix and others are a major contributor to that disparity. Residuals formed the essence of deals with talent in the age of Television. But the internet broke that. This was the basis of the WGA’s last strike in 2007, in which now President of AMPTP Carol Lombardini stated clearly their position, “… that that business model is obsolete.”

      Strike action is the obvious union response to failure of AMPTP to offer a new business model.

      This is touched upon in the article, but not the point of the article.

      The point of the article is that the “Studios” have a very different agenda than the members of either WGA or SAG-AFTRA. That agenda is to break with the “old” LA-Centric Hollywood and build a “new” global Hollywood.

      The historic WGA/SAG-AFTRA strikes offer additional international corporate rationale for doing just that.

      To maintain power, or at least wield influence, the Old Guard unions might consider getting ahead of this movement, figuring out a more equitable business model and getting involved at the shareholder level, where the real decision-makers are shaping the future.

      • it doesn’t much matter if the Studios want to build a new global Hollywood, though i’m not convinced they do. They still have to pay the content creators properly. This isn’t an industry like electronics where manufacturing can be done in Asian countries where labour is cheap. Even in electronics, creating and owning the IP (patents rather than copyrights) is where the money is, hence the massive stock values of Apple, Microsoft etc.. The difference in electronics is that the actual IP creators are generally very well paid for their work. The internet is merely a new delivery system, and the move to try and replace unit sakes with subscription revenue isn’t really all that new – many businesses are trying this now, some very successfully (i.e. most software companies). But to use this as an excuse not to share profits at the same time as paying senior executives tens of millions of dollars is, quite frankly, despicable

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