Why streaming and AI disruption is unlikely to have a Hollywood ending

With the writers’ strike nearing 100 days long, there is still no end in sight to the first industrial dispute of the streaming era. Both the studios and screenwriters met last Friday and failed to reach a workable compromise. Since the Writers Guild of America (WGA) launched their industrial action three months ago (its first since 2007), they have been joined by the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA). This is the first time that film and television performers have both been on strike since 1980. At the opposite end of the negotiating table is the Alliance of Motion Picture and Television producers (AMPTP) that acts as the trade body representing over 350 American TV and film production companies including Disney, Netflix, Paramount, and Warner Bros. Discovery. At the heart of the dispute are the economics of streaming and the looming disruptive risk of AI.

WGA, representing over 11,500 writers across film and TV, has several key grievances that it is seeking to resolve with the AMTP. Firstly, it is striking over residual pay – royalties received for syndicated re-runs – that the WGA argues has not adjusted for the streaming business model. In the analogue world, writers received payments for TV and film content whenever it was syndicated through repackaging, reselling, or re-airing. This created predictable long-term multi-year revenue streams and ensured financial security for writers. However, streaming services pay single fixed residuals that are not tied to viewer numbers and there is no additional payment when the content moves between different streaming services. Streaming, along with other online distribution models, was classed as “new media” in 2007 (when the last writers dispute was settled) and is therefore covered by the WGA’s Minimum Basic Agreement (MBA) that guarantees the lowest amounts members can be paid for their work. As we move into the streaming TV era, with streaming services dominating commissioning, an ever-increasing percentage of writer’s revenue is now MBA residual income. In light of this shift towards streaming derived single fixed residuals, the WGA wants to reopen the new media distribution settlement in light.

Another area that is catalysing the strike is AI. The WGA wants “guardrails” for AI-generated content that effectively protect its members from the disruptive forces being unleashed by content generation technology –  in July it was revealed that a start-up called Fable Simulation had created an experimental AI story generator based upon South Park intellectual property.  The WGA’s  position is that it would allow for the use of AI — but only as a tool for them to use to aid their own work. What they are seeking to prevent is the ability of AI to become credited or treated as source material – the contractual language for content that writers may develop into scripts. Again this is now potentially already a reality  with a March Episode of South Park on AI having a ChatGPT credit (whether genuine or satirical is yet to be determined.)

Actors are feeling the same streaming pain and are equally worried about AI

For SAG-AFTRA, alongside demanding significant general wage increases to keep up with the record inflation that has swept through the US, they are looking for something more radical from AMPTP: a cast share in revenue on high-performing streaming shows. This has been proposed (and rejected) at 2%. Similarly to writers, actors are seeing traditional lucrative long running seasons compressed into shorter and fewer seasons as data-focused streaming services seek to optimise long-tail content as viewing fragments. For actors, the boom time in content commissioning is occurring while prime time is disappearing and viewer tolerance for engaging with long-running shows is dwindling. Actors are effectively falling victim to the post-peak attention economy.Another issue for actors that dovetails with the striking demands of the writers revolves around AI. SAG-AFTRA’s proposals include establishing a “comprehensive set of provisions to protect human-created work and require informed consent or fair compensation” when AI is employed to make a digital double of a performer. The disruptive scenarios for actors outlined by SAG-AFTRA range from paying background actors a day’s wage to scan their likenesses to create future AI extras, to changing the dialogue, images, and even scenes that an actor appears in without their consent. AI is already being used to de-age actors such as Harrison Ford and Mark Hamill, and documentaries are being made with the voices of dead talent such as Anthony Bourdain and Andy Warhol.

A crisis 16 years in the making turbocharged by AI

Both writers and actors know that the concerns and demands of entertainment professionals can appear superficial amid a cost-of-living-crisis. However, as creators and performers incomes stretch, this is also happening in streaming TV and music streaming. A failure to fix this will lead to an exit of talent during peak demand for professional entertainment content.

On the AI front, technology has enabled the streaming revolution. However, this time it feels different as, for the first-time, human creatives are at risk of being made obsolete by a technology that is continually improving, works constantly, and does not require payment for its services. The outcome of this dispute will shape wider societal attitudes towards AI. Consider the words of actor and writer Johnathan McClain in Fortune:

“It’s easy to marginalise what we do because it’s entertainment. And I get it. But I feel on some level we are, as far as this tech conversation is concerned, a little bit of a canary in a coal mine. This is an important moment and we’ve got to really make a decisive stand.”

When the centre (streaming renumeration for creative professionals) cannot hold, the fringe collapses first (AI concerns). The longer the disturbance lasts, the more damage is done to the overall structure. With studios under threat from tech companies which are investing heavily in content to drive primarily non-content outcomes (think hardware upsells and ecosystem retention plays), these two strikes are unlikely to have a Hollywood ending. Ultimately the studios are  striving to become  commercially viable and thus seemingly moving inexorably towards a zero-sum outcome for actors and writers. The hope for Hollywood has to be that the human interest story at the core of this dispute will triumph, with humanity placing stronger guardrails around AI and ultimately delivering sustainable revenue models for the broader professional ecosystem.