Hollywood Math Is Not Mathing — The SAG-AFTRA Strike
On Thursday, the actors of the United States made a move they had not made since the 1980s. The Screen Actors Guild — American Federation of Television and Radio Artists (SAG-AFTRA), the union that represents 160,000 actors, voice actors, radio show hosts, and more, decided to strike. This came after a lengthy failed negotiation process with the Alliance of Motion Picture and Television Producers (AMPTP), which represents all of the major American film and television production companies.
So, SAG-AFTRA joins the Writers Guild of America (WGA) on the picket line. The latter guild has been striking for 74 days as of this writing, with no sign of stopping. That’s partially because studios are relying on already-finished films and movies, or reality programming to fill the gaps. In fact, the studios are prepared to ride the strike out until October. “The endgame is to allow things to drag on until union members start losing their apartments and losing their houses,” one anonymous studio executive told Deadline.
Both striking guilds are concerned about similar issues: AI and overall pay. In regards to the former, the WGA is looking for assurances that AI “can’t write or rewrite literary material.” SAG-AFTRA is pushing back against a proposal that would give studios control over digital doubles for actors, with only a one-time payout.
“They propose that our background performers should be able to be scanned, get paid for one day’s pay, and their company should own that scan of their image, their likeness, and should be able to use it for the rest of eternity. So if you think that’s a groundbreaking proposal, I suggest you think again,” stated SAG-AFTRA chief negotiator Duncan Crabtree-Ireland in a press conference. The studios contend this is incorrect, and that they merely want to use the process for whatever current project the actor is contracted for.
If AI is a theoretically existential threat, the issue of pay and residuals is a much clearer threat: The business of Hollywood simply isn’t working anymore. In film and television, but especially in the latter, the shift to streaming has simply gutted a large part of the way actors and writers used to be paid. To see why, you have to understand how both business models used to work, versus how they do now.
The Good Old Days
For film, it was originally just down to the theatrical release. With the advent of VHS, there was a theatrical window of at least six months before folks could purchase a film on home video or rent it. Then video-on-demand (VOD) through cable companies was rolled in. The logical progression became something like this: theatrical release for 90 days, then sell-thru (VOD, digital, and disc sales), then rental a few weeks later. At each step, the films were making a certain amount of money for the studio, whether that’s through direct sales or licensing fees. In addition to their salary on the film, major creatives involved in the production would get a small cut at each step, also known as residuals.
On the television side, money was generally made through advertising. The more popular your show was, the more advertising during your show’s air time would cost sponsors. If you reached the threshold of 100 episodes for your ongoing show, then it would be sold into syndication. This is a process of licensing shows to other networks or public broadcasting. (This is what we used to know as reruns.) Once again, the more popular your show was, the more likely it became syndicated, meaning it would make a bit of cash in perpetuity. With the addition of home video, seasonal collections provided another way to make money through direct sales. Once again, creatives would receive a small cut of each of these revenue sources, after their salary.
In the past, one big success meant creatives were set. The cast and creative leads from Friends do not have to work, because the show itself was so popular that the residuals from syndication, home video, and even streaming licensing deals means money is always coming in. That used to be the promise of Hollywood; so many, many failures, but the big successes meant you were set for life, or at least a good chunk of time.
A New Model For A New Era
Let’s look at what happens today. For films, there’s still a theatrical window, usually 60 days. (During the pandemic, there briefly was no theatrical window.) After that your film goes to streaming and sell-thru. This means, folks can buy or rent your film, or more likely, just watch it on the company’s streaming service. Of course, the latter lowers demand for the former; most don’t feel the need to own a film since they feel it’ll always be there on the streaming service. (The reality is less certain!)
For television, it’s just streaming mostly. That’s not to say that shows aren’t being made under the older business models at networks like ABC, CBS, and NBC, but a large chunk of the industry makes television shows for streaming platform. And for streaming, the money is only coming in when the show is being made. The backend money from residuals is almost non-existent, and the show can theoretically run on the service forever, meaning it won’t be licensed again.
You can see the growing issue in the stories from actors and writers about the lack of residuals for major streaming hits. Shawn Ryan recently delivered The Night Agent for Netflix, becoming the streamer’s sixth most popular English television series. Despite the huge viewership of 803 million hours, Ryan says he stands to make far less on The Night Agent in residuals, compared to the check he receives for The Shield, which aired on the less-popular FX cable channel.
“Half a billion hours is the equivalent of over 61 million people watching all ten episodes in 18 days. Those shows that air after the Super Bowl — it’s like having five or ten of them,” Ryan told Vulture. “In my case, it means that I got paid what I got paid. I’ll get a little bonus when season two gets picked up and a nominal royalty fee for each additional episode that gets made. The promise was that if you made the company billions, you were going to get a lot of millions. That promise has gone away.” (Ryan acknowledges that he’s doing pretty well in the article regardless.)
Kimiko Glenn, who rose to fame as an actor on Netflix’ Orange Is the New Black, recently stated on social media that she received just $27 on her last residuals statement. The New Yorker spoke to numerous actors from the show, many of whom had their own stories of poor pay and working multiple jobs to stay afloat. One tale notes that while at a SAG Awards party, Netflix’ then-chief content officer boasted that more people watched Orange Is the New Black than HBO’s Game of Thrones; the trick being the latter was on a traditional network, so its stars were being paid much, much more than most of the Orange cast.
If you’re looking for a more-recent example, Squid Game creator Hwang Dong-hyuk told The Los Angeles Times that he made no residuals on the first season and has no intellectual property rights to the series. That’s because the new business model — pay creatives just on the front-end and keep all the back-end for the streaming service — was largely put in place by Netflix. Every other company just chases that perceived success, and a new way of working that allows executives and companies to keep more of the money.
That’s not to say Hollywood knows how to make streaming profitable in and of itself. Netflix has been spending into debt for a long-time, while Disney+, Paramount+, and Peacock are losing money for their respective studios. Streamers are beginning to turn toward ad-supported plans and free, ad-supported streaming television (FAST), essentially remixing the older broadcast models on new platforms. But there is money being made, and that money isn’t going to the folks who make the shows and films that are racking up streaming watch time.
That lack of payment for the work they’re doing, the entertainment they create, is why SAG-AFTRA and the WGA are striking. Worse, the change in business models is also making it much harder for Hollywood to produce new creatives. The writers contend that smaller episode counts and the binge model make it hard for new writers to rise up the ranks and become showrunners themselves. The way things are now is simply unsustainable, financially and creatively.
The work will suffer without proper compensation, without time for folks to really devote themselves to one project, one vision in a healthy manner. The Hollywood machine doesn’t work without people, and the output will eventually be terrible if you grind those people into paste. The demands from both unions aren’t out of line and should be taken into consideration. And if executives don’t listen, they’ll stand atop a mass of expensive “content” that no one wants to see, captains of a fleet of sinking ships. (The 2023 box office says “hi”.)
This was the essay portion of my weekly newsletter, Stuff Worth Knowing. Every week, I round up the most important news across film, television, video gaming, and tech. If you just want the essays, I’ll be posting them here in the future, but if you want the full news round-up, you can subscribe to Stuff Worth Knowing for free! (Or chuck in a little money.)
