Hollywood writers have ended their strike in the early hours on Wednesday morning as they made a deal with The Alliance of Motion Picture and Television Producers (AMPTP), who is representing the interests of Netflix (NASDAQ: NFLX), The Walt Disney Company (NYSE: DIS), Amazon.com Inc (NASDAQ: AMZN), Paramount Global (NASDAQ: PARA) and Warner Bros Discovery Inc (NASDAQ: WBD).
In response, Paramount and Warner Bros. Discovery shares rose more than 2% each, followed by Netflix and Disney whose shares went up 1% and 0.5% respectively. The WGA contract could act as a template for Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) to draft its own deal with the studios.
AMPTP Has Adhered To WGA's Demands
The Writers Guild of America which represents 11,500 film and television writers successfully fought for an increase in minimum pay, a new residual for streaming based on viewership and limiting the use of artificial intelligence. The guild negotiated also negotiated better right in streaming with a new residual based on viewership.
New Streaming Structure
Streamers like Netflix will be obliged to provide the guild with statistics such as the number of hours streamed both domestically and internationally for self-produced high budget streaming programs. With the new residual implies that high budget subscription video on demand series and films that are viewed by 20% or more of the service's domestic subscribers during the frst 90 days of release get a bonus equal to 50% of the fixed domestic and foreign residual.
AI Restrictions To Protect Writers
The use of AI to write or rewrite literary material has been prohibited with AI-generated content will not be considered as source material.
Contract Terms
The agreed upon deal will last until May 2026 and once ratified, it includes a 5% minimum pay increase along with another 4% rise expected in May 2024 and a 3.5% increase in May 2025. WGA members can vote in favor or against the contract until October 9th.
The AMPTP Also Needs To Deal With SAG-AFTRA
A five-month strike ended with better compensation and protection for writers but producers need to make a deal with SAG-AFTRA that is representing 160,000 film and television actors, stunt performers, voiceover artists and other media professionals. Although their requests are similar to those requested by writer, they have some additional requests such as the standardization of the self-tape process, which became popular during the pandemic, as actors have observed inequity in auditioning between those who can afford quality camera and lighting equipment and those who can't. When SAG-AFTRA joined the strike in mid-July, it literally put Hollywood on pause as this was the first time in 63 years that two unions went on strike at the same time.
The Damage Goes Beyond Billions
According to an estimate from Milken Institute economist Kevin Klowden, the economic cost of the two strikes costed California and other U.S. production hubs at least $5 billion. But the damage goes beyond billions, beginning with Disney who has been exploring AI possibilities in an effort to cut its costs, enraging writers and actors who fought fiercely over the last 150 days to limit the industry's exploration of this technology. The once-beloved Disney CEO Bob Iger is no longer America's most beloved CEO. Disney has already been dealing with several internal issues and an urgent need to reinvent its linear TV model in the streaming age, but Iger's return didn't helped bring back the magic.
Moreover, by finding the demands of the unions 'unrealistic', Iger threatened the image of the world's biggest entertainment company, and damaged his legacy, failing to find a diplomatic way out of this blunt statement. The cost of the strikes only made the already challenging remaking of Disney more difficult, with the deal further limiting Disney in exploiting the cost-cutting possibilities of AI.
New Rules Are In Play
Although it is more challenging to evaluate the standing of Apple and Amazon when it comes to streaming as they report their results as part of larger divisions, Netflix showed during the strike that it is undoubtedly in a better shape compared to its rivals, especially Disney whose stock crashed to the lowest level in nine years at the end of August.
Although Netflix didn't tell the whole story of its successful projects, it was at least more transparent compared to its reluctant rivals by posting weekly updates about its best-performing content. In contrast, Amazon and Apple Inc (NASDAQ: AAPL) never revealed how well any of their original productions have performed on Amazon Prime Video and Apple TV Plus. But from now on, Amazon, Apple, Netflix and Disney will need to reveal more official viewership data, kicking off a massive power shift on the streaming front and in the overall industry.
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