As exhibitors all over the world tune into the Oscars this weekend, still giddy from counting all that “Avatar: The Way of Water” box office, they may not be aware of a threat to their business lurking on the horizon. It is not a problem having to do with theatrical windows or the now mostly retired day-and-date release strategies. Albeit, streaming is ultimately once again the crux of the issue. Just not in the way you might think.
And while it may revolve around a dispute based in the United States, it has global ramifications for exhibitors. If there is one thing theatre operators learned during our recent pandemic, it’s that if you don’t have movies to show, especially Hollywood blockbusters, audiences tend not to visit cinemas. Now, just as the release pipeline starts to head back toward pre-pandemic levels, studio productions are likely going to grind to a halt or be severely hamstrung on the 1st of May.
That is the day the current Writers Guild of America contract with studios and producers is set to expire. It now seems inevitable that a writers strike will occur, meaning all sorts of production will cease; late-night talk shows, television series, streaming shows and potentially movies of all shapes and sizes. The reasons for the pending labor battle are complicated, as labor conflicts usually are, but they are focused on how streaming has negatively affected writers’ working conditions and payment levels. Media executive Jeff Zucker may have coined the phrase “trading analog dollars for digital pennies” but for writers working in the age of streaming, it’s a stark reality.
To be sure, a lot of the disagreement has to do with writers who work on television or episodic shows, however the WGA would go on strike as a single group. Besides, these days there is a lot of crossover between movies and television and vice versa when it comes to writers. Historically, a television show was developed by first shooting a single pilot episode. Then if the network decided to move ahead, the producers would hire a group of writers to work, over an extended period of time, on upwards of 22 episodes a year. These writers would be paid a weekly salary plus a script fee for when an episode they wrote was produced. These payments were partially throttled because, if a show was even modestly successful, a writer had the opportunity to make several multiples of their initial fee by receiving royalties for years to come.
In the streaming era pilots have mostly been done away with. Instead, a network or platform like Netflix will greenlight a whole season of a particular show. But instead of that season being 22 episodes, it’s only eight, or 10 or at the very most 13. And instead of working on each episode’s script one-at-a-time, producers hire a much smaller pool of writers to map out the entire season and write all the episodes before cameras start rolling. A flat fee is paid for the entire job, rather than on a per-week, per episode basis, so if time runs out, the writers still owe the episodes.
As for residuals, there are little to speak of. The average residual check for traditional television shows might be between USD $10,000 and $20,000 for a given production year-after-year. On a streaming show they hover around the USD $200 range. In essence, residuals have disappeared, but that throttled pay level, the one that was artificially lower because residuals were meant to make up the difference, has hardly increased at all.
So you’ve got writers working on shows with shorter seasons, that wind up having shorter life spans of three or four seasons, much smaller writing staffs and no longterm residuals. In the meantime, the opportunity to work on spec screenplays or movies has dried up since fewer original films are being made by studios and streaming platforms.
There are indeed writers with great deals like Shonda Rhimes and Ryan Murphy. Yet there are over 16,000 members of the WGA and for every J.J. Abrams who is leaping from television projects to “Star Wars” sequels, there are hundreds, if not thousands of writers, toiling away at scale for a few weeks at a time. In the past, residuals and selling the odd spec screenplay would allow these writers to make a decent annual living, averaging between USD $150,000 to $250,000. That sounds like a lot of money, but keep in mind that agents, lawyers and other reps take percentages out of that income and the median home price in Los Angeles County is hovering just under USD $1 million. Real estate in New York City is no less expensive.
There are no easy fixes to these problems since the industry’s entire business model has been upended. And, because studios and producers shortchanged writers on DVD and Blu-ray residuals for two decades, claiming the technology was so new that profits weren’t assured, the WGA intends not to play the fool and fall for the same argument with streaming. Plus, if the guild doesn’t take a stand now, before the Directors Guild of America and the Screen Actors Guild negotiate their own contracts over the next two years, they will be forced to take the terms other guilds accept.
So how does this all relate back to movie theatres and what does it mean for exhibitors? Well, it is widely expected the WGA will strike starting in May. The last writers strike in 2007 lasted 100 days and interrupted production for months before, during and after that. This caused a bit of a ripple in the release schedule during the following two years, and that was at a time when studios were making more movies than they do now. The post-pandemic release schedule is already pretty light (though slowly increasing).
While film production may not entirely stop, no writer will be available to fix problems, write new dialogue etc. In 2007, Abrams and writer Damon Lindelof were in the middle of shooting “Star Trek” when the strike prevented them from adding new dialogue they came up with on set. Twentieth Century Fox was in such a rush to get “X-Men Origins: Wolverine” finished before the strike they began shooting without a script. Actor Daniel Craig will still bend your ear about having to write dialogue and scenes on the set of the James Bond film “Quantum of Solace” because writers weren’t available. And whatever you do, don’t get Christian Bale started on his “Terminator Salvation” experience.
A strike could cause there to be a run of mediocre titles or a gap in available features not only for theatrical release but also for the streaming platforms, some of which are owned by studios who might need to reroute certain titles to appease subscriber demands. Studios have been banking features in preparation for a strike, so if it is short-lived, any disruption might be minimized. That might be the best outcome.
Of course, though Hollywood productions will be affected by any strike, it isn’t the only place where movies are made, and international titles are increasingly more popular with mainstream moviegoers. Just a thought.
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