Hollywood is on strike because CEOs fell for Silicon Valley’s magical thinking

I could as easily say they are on strike because the economy is contracting, and they are the least shielded from the contraction. No need to add SV into the mix. Studios have always been on the lookout for ways to not pay them, such that the latest attempt being streaming seems a bit of a non story item.

Again, consider if we had never moved to streaming and instead they were trying to get their payouts from the movies that are checked out from redbox. They would be seeing as much of a dropout in residuals as they are seeing, as the dip is in syndication residuals.

this is slightly incorrect. the WGA was talking about a strike, then the AMPTP made it clear that they wanted to reserve the right to replace people with AI, and that escalated things quite a lot. but a strike was already on the horizon before that happened.

the analysis in the original LA Times article is all about streaming, and barely touches on "AI" (ML). this is correct, in my opinion, because the role of ML in this is kind of an attention-getting red herring.

in fact the article's way better than I expected when I clicked the link. I basically endorse its reasoning top to bottom.

a little context on that endorsement: I built a decent chunk of Hulu when it launched, and I've worked for an actor whose name you'd all recognize.

I have a vaguely insider-ish perspective on this, and I would really urge you to consider the fact that Hollywood's extremely visible, but also quite opaque.

this is the most important paragraph in the article:

It’s been noted, and correctly so, that entertainment industry labor disputes often erupt when there’s a change in technology — from theaters screening projected films to the cathode ray tube of the home television, say, or the rise of YouTube and other online content in the 2000s — and that happens for a reason. Historically, executives and management use a disorienting new technology to try to justify lowering wages of their workers, and they have done so since the days of the Industrial Revolution.

they definitely want to do that with AI, but they have been doing that here in reality with streaming.

The AI bit is just much more exciting to talk about, for everyone involved.

Wtf? Is this really a thing?

Netflix owning the content it’s producing means they can use it to help retain customers indefinitely. It’s a very difficult value proposition to accurately calculate because in say 2025 they could stop streaming and still have a revenue stream from licensing their content to other platforms.

Studios did originally take them up on some early license agreements that were very time limited to see the market. And they kept terms that were basically identical as some of the terms they use for syndication, which Netflix agreed to as they don't want to share too much data, for fear of things.

Not shockingly, at the table between studios and Netflix, the actors and writers are not represented. Getting that corrected does make sense to me. I'm not entirely clear that having residuals tied to actual streams will actually benefit as many as the current discussion hopes.

Then that's just the cost of acquiring content, not a total loss. I'm not comfortable labeling it a loss because it supports user retention _and_ acts as force to draw in other content providers.

> their own show creators having zero royalties — look at the squid game financials

The economics of Kdramas (which is what Squid Games is) are different from that of American productions [0]. Netflix for example doesn't give residuals but is able to pay the entire production team way more than what Korean studios like Lotte, Myung, etc are able to with residuals.

A similar story happened with the rise of KDramas btw. In the early 2000s, JDramas became expensive when production houses like Sony started upping their pricing, which lead networks across Asia to start selecting cheaper dramas, which back then was Korean.

A similar shift is starting to happen again with the rising popularity of Chinese and Thai dramas (at least in ASEAN) which I feel is largely due to how their rights are now significantly cheaper than KDramas.

Imo, a similar shift also happened in OTT content in the US. Look at the "popular" (ie. Social media buzz) shows recently. It's either back catalogue shows like Community (#sixseasonsandamovie) or much cheaper produced European or Canadian shows like Kim's Convenience, Schitt's Creek, Downton Abbey, Peaky Blinder, Outlander, etc.

[0] - https://factsanddetails.com/korea/South_Korea/K-Dramas_Telev...

That'd have been great, but they studios decided they wouldn't license their content to them. Instead they went off to make their own streaming services, with their content exclusive to it. They effectively forced Netflix to start making content, or face an empty catalog.

There is a reason some governments previously blocked studios from owning theaters. It leads to goofy behavior.

Netflix is quite profitable, so this is clearly not true in any meaningful way.

Uhh, how much content do you think Netflix is making?

There exists 8760 hours in a year.

To produce "hundreds of thousands of hours of content each year" would require producing almost 23 hours of content for every hour in the day. Every single day.

From its creation Netflix has only produced around 1500 original shows. Give a few hours per movie and maybe 10-50 hours per show depending on episodes and seasons.

No where close to hundreds of thousands of hours of content even since their inception.

And it is a bit mind boggling to think of 4.4 billion in profit. Wow.

Still, my point mostly stands? If the studios decide not to let Netflix stream their movies, then they don't stream their movies. This was far more hollow of a threat in the early days of streaming, but nowadays it is very conceivable that they can leverage their back catalog for someone. Such that Netflix is quickly getting to where what got everyone to sign up is at major risk of going away.

And this is far from hypothetical. It is mind boggling to me that Daredevil is no longer available on Netflix. Something they literally helped produce.

I am still a little curious on a few things in this. For one, I'm not clear on how long residuals can last in a sustainable way. Pretty much no matter how I try and simulate this payment model, it falls on needing more income from future participants. Not quite a ponzi scheme, as you are not asking future members to put money into the pot. You do need them to keep the machine running, though.

Granted, in that framing, the studios are effectively private equity groups that have managed to skim off a ton of value from the creative works? (Saying this as someone that isn't too keen on what a lot of private equity has done.)

Netflix has been a publicly listed company since May 2002, has been posting profits since 2003, and started streaming in Jan 2007.

Fundamentally it's human laziness and corruptablility, both actively and passively.

But it's also basic human nature in reaction to stock market bubbles and the fomo of getting rich quick.

There aren't enough rules and regulation around stock market trading, or at least they're not enforced well enough, to maintain some kind of rationality.

... and it still may not actually be possible.

But there's little effort to reign it in because the powers that be tend to massively profit from the status quo.

Surely you're not suggesting a gold standard would solve the issue?

Because there was no boom and bust before fiat…

The same executives who want to steal the wages of the writers and actors are responsible for the quality and range of productions. It is only a handful of directors who get full creative license.

I agree that good sci-fi is rare but don’t think that my personal dissatisfaction should result in many thousands of already exploited people who put in incredibly hard work, their heart and souls in what they do, to go jobless - because you and I don’t like how their bosses, the same bosses who are trying to squash them, do their jobs.

Finally, we might have similar tastes. A few things you might like: Outer Range; The Underground Railroad.

I believe that the entertainment workers strike in Hollywood deserves my support.

Not adequate either. Throwing a hundred ads during one show, at the same time charging you for it and that's somehow a good experience? Netflix is a million times better and that's why they're still raking in money.

They may not have profited as much as they would have from cable, but the number of viewers seems to speak for itself. I know they aren't the HN audience but surely we can see wider than that.

I'm talking about how billionaires like Bob Iger are essentially trying to squeeze "labor" to extract more profits, which is what Wall Street did to the newspapers, to radio, to television, the music industry...

We're getting ever crappier products in nearly every consumer category, because short term profits for shareholders are prioritized over the long term viability of the firm. Wall Street likes to shred firms for "value" and move on.

I want healthy capitalism, not scorched earth financialism.