Today we’re talking about the writer’s strike. What’s actually happening, what the unions want, and what it all means for the film industry.
This issue features interview quotes from industry pros, including screenwriters Lisa Scott and Alan J. Field, and union film projectionist B.J. Serviss.
We also have a unique movie investment opportunity for you.
This is a really interesting issue. If you have questions about what the heck is going on with this strike, you’ll love this one.
Let’s go 👇
Table of Contents
Why are actors and writers striking?
To understand this situation, you need to understand the players:
- The Screen Actors Guild. This union represents actors, and is also known as SAG-AFTRA. They constantly negotiate with studios for better contracts.
- The Screen Writers Guild of America. This union represents writers, and is split into the West Coast faction (WGAW) and East Coast faction (WGAE)
- The Directors Guild of America. This union is known as the DGA, and is the only major union not on strike. But they have no writers and actors to work with, so many stand in solidarity with the other unions.
- Each of these unions has separate contracts with an organization representing the studios, called the Alliance of Motion Picture and Television Producers, or AMPTP. These guys are responsible for negotiating union contracts.
The agreements these unions have with the AMPTP were created years ago. Before streaming took over. Before AI. Before our collective attention spans went to hell.
This all started with the writers, whose contract ended first. The WGA has been on strike since May 2, and SAG-AFTRA joined on July 14.
Now that streaming is eating the world, both writers and actors want to renew their contracts. And the AMPTP isn’t meeting their demands.
There are three issues at the heart of the dispute: AI, series length, and residuals.
A.I.
This one gets all the buzz. Let’s get this out of the way first.
AI is becoming a very big deal, and the unions want protections.
On the writers’ side, there is concern studios will use AI to write full episodes, and poison an already unhealthy industry. It’s a very real concern.
Let’s say you’re an executive at Wolf Entertainment in charge of creating the 25th season of Law & Order: SVU. In theory, you could train an AI model on the previous 24 seasons, and have an entire season written for you — perhaps hiring a “punch-up writer” that edits/fixes all the junk.
However, despite the buzz around ChatGPT, this is more of a concern with actors than writers. Because the way AMPTP wants to use AI is eye-opening.
As we know, movies typically use extras, who are part of the SAG-AFTRA union. These non-speaking roles get paid a small amount — around $100/day — to be on set for a big scene, which may take 5 days or so to film.
The studios want to pay extras for a single day of work, and be able to legally use that actor’s image and likeness in perpetuity! They want to stockpile a library of background actors, use them for any project in the future, and never pay them.
This would set a terrible precedent for multiple industries. For some actors, background work is their full-time job. It’s what they do for a living. The idea that these folks would get paid one time and never be re-hired again is pretty crazy.
This concept is even the plot of a recent hyper-meta Black Mirror episode:
Series length
Remember when TV show seasons went for 20+ episodes?
This may blow the minds of younger people, but TV shows ran all year long, only breaking briefly for the summer.
Now, they’re much shorter. A typical season is just 8-10 episodes. This means you don’t need a big staff of writers, writer’s rooms are getting smaller, and writers are having trouble paying the bills.
You used to get a weekly paycheck for a show with 26 episodes a season. Now writers bounce around from show to show, making a third of what they used to make. TV writers have basically become gig workers. -B.J. Serviss, union projectionist
The really interesting part here is that shorter seasons don’t mean studios are making less money. Writers and actors used to be compensated based on how successful a show is, but now the dynamics have changed.
Which brings us to the biggest complaint from the unions…
Residuals and streaming revenue
Okay, this is the big one.
Residuals are funds paid after the initial airing. (So basically, reruns, syndication, DVD release, and streaming.)
Directors, actors, and writers all receive them. Or at least, they used to. Residuals are down. Way down.
Today, those who were once paid for reruns of network shows often get nothing. As we discussed in our previous issue on film financing, when Netflix buys the rights to a film, it’s a one-time deal. They pay for all the production costs upfront, but own the full rights forever.
It’s a different model to Spotify, who pays royalties per stream (It’s a pittance, sure. But it’s still something)
And unlike Spotify, who publishes oodles of data with Spotify for Artists, streaming companies don’t publicly share streaming data. Sure, they share the info with advertisers, but not with actors and writers. The unions don’t know how many streams each piece of content gets.
Why? Because they don’t want the unions to know how successful they are.
Streaming ad revenue is big, and Netflix, Disney, and Amazon have been raking it in. But it doesn’t matter if a show gets ten thousand watches per week, or ten million. It doesn’t matter if it wins Emmys (Netflix Originals have clinched 135 Emmy Awards). The actors and writers only get paid once.
If you’ve seen Fran Drescher in the news lately, this is why. Back in the 90s, when Drescher created The Nanny, she got paid for 24 episodes per season. Then she got paid for syndication rights to TBS. Then she got paid for all the reruns.
Now she’s the president of SAG-AFTRA, fighting to spread the wealth for the next generation.
What do people get wrong about the strike?
It’s natural to think, “Aren’t these actors just being greedy?”
People assume that actors make a lot of money. Just like many industries, this really only applies to the top 10%.
Yes, those at the very top make bank. But there is a huge power law. The numbers go down real quick.
For everyone else — all the guest roles, bit parts, actors in commercials, background extras — these actors all rely on the strength of the SAG-AFTRA union: 160,000 strong.
Still, just 12.7% of SAG actors qualify for union health insurance. Actors routinely work paycheck-to-paycheck. A friend of mine was in Oppenheimer, where had had lines, and he is literally working as a barista right now. The struggle is real.
It’s the same with writers. Unless you’re a producer or showrunner, you get paid a very small percentage of the production. (If a film costs $1m, you might get 2-3%.) TV writing has become a dead-end job.
What does this all mean for studios?
A storm is brewing for the streaming companies
Netflix is a content machine.
They’re both a studio (which creates original content) and a distributor (which buys content from other studios).
Content is the nucleus of their entire flywheel. Netflix spends an astonishing $17 billion on content per year, and right now that money has nowhere to go. They need a constant stream (pun intended) of fresh content, or viewers will get bored and leave.
It’s already tough to find something good on Netflix, and they can’t just keep showing the same stuff forever. Even if they’re sitting on a stockpile of pre-written material, they can’t hire any actors!
Oh, and they can’t get content from Warner Brothers anymore, because that all lands on HBO Max (err, “Max”). They can’t buy content from Disney, because that goes on Disney+. The major studios all have their own platforms (and frankly, are all in the same boat as Netflix.)
Everyone was stuck at home and ravenous for content. But that’s not the case anymore. Today, Netflix competes against other avenues of entertainment.
Bottom line: Netflix has a lot to lose here
They can ride the storm, but they cannot produce new content.
There’s a crunch coming. They’re going to need to find new content, or eventually they’ll lose subscribers, the advertisers will spend less money, and the whole thing will fall apart.
One place to find content is the global market. Remember, this strike is a US phenomenon. Yes, there are solidarity strikeselsewhere in the world. But production in the UK, Australia, Korea, France, etc hasn’t skipped a beat.
We should expect to see more global content make its way to Netflix in the short-term. – Lisa Scott, screenwriter
We may also find Netflix spends more on procedural dramas, documentaries, and low-budget films — those that have a smaller budget and tell a story in the most creative way possible.
In other words, exactly the type of stuff that indie films excel at…
Now’s the time for indie films to shine
Studios are basically deadlocked at the moment.
Even if you’re a writer not in the WGA, you won’t dare cross the picket line. Because if you do, they’ll ban you from ever joining the union in the future. Same with actors.
So there’s not much big studios can do.
But here’s the thing: There’s a carveout for indie studios!
If you are truly independent, you can hire and work with any of the union actors. You just need to get permission from SAG, and sign documents promising to comply with all of their rules and legal requirements. This is known as becoming a SAG signatory.
This is a big deal. It means that as long as everyone agrees on the terms, any unionized writer or actor can work with indie filmmakers!
Actor Mark Ruffalo has led the war cry here, encouraging actors to work on indie films and “exit the empire of billionaires.”
In a nutshell, the strike is hugely beneficial for indie studios.
Actors and writers are looking for ways to work without getting in trouble with the union, and this is exactly how to do it.
Right now is the best time in decades to be an indie filmmaker, to act in indie films, and to fund indie films.
Speaking of which…
A unique film investment opportunity
A few weeks ago, Alts community members (and screenwriters) Lisa Scott and Alan Field contacted me about a film they’re currently making.
It’s called A Jewish Christmas; a dramedy that takes place entirely in a Chinese restaurant (the only places that are open on Christmas) 😂
Right now is the perfect time to create this film. They’re raising money to produce the film, and you can invest in it.
Here’s where the project stands:
- Script. The script is complete and already being shopped around. It’s pretty funny — you can read some of it.
- Actors. Getting the right actors will be crucial to the film’s success. About half the funds will be put towards actors.
- Production. To save on costs, the film will be produced using one single camera shot for the whole location. Inspired by films like Boiling Point, their goal is to make the movie feel like the famous scene from Goodfellas:
The script is already written, and the location is scoped out. The next step is to raise funds, hire actors, and shoot!
The great news about their project is that the whole film can be shot in 90 minutes once choreography is done. They plan to do 4 full takes and then pick the best one for distribution. This will save a ton of time and money, especially in post-production where the editing of a feature film can take several months
Lisa aims to get an A-list Jewish actor to play the lead role. Getting a big name to join can get you into film festivals, onto Netflix, and create a snowball effect. (If you can get one, you can usually get two or three). Someone like Sarah Silverman would be perfect. Or perhaps Jewish hip hop artist Little Dicky.
The film’s budget is $1.6m. Your financial investment will help produce the movie. You’ll get an executive producer credit and get a cut of the revenues!
I’ll be doing a deep dive writeup on this opportunity later this week; really exploring the economics of film production, and how this all works.
In the meantime, if you’re interested in learning more and connecting with Lisa and Alan, email [email protected] I’ll make a personal introduction.
Closing thoughts
A film supply crunch is coming — the first major shortage in our lifetime. It will be fascinating to see how the studios respond.
Netflix will likely stop doing big-budget stuff; spreading the content around on smaller indie stuff, perhaps buying & distributing more international content.
As much as I’m rooting for the unions on all this, I feel the specific fight against using AI extras is ultimately a losing battle.
To be clear, the technology to fully, convincingly recreate complex behavior on film is still years away, as evidenced by this hilariously awful attempt at creating a video of Will Smith eating spaghetti:
But I’m glad they’re fighting the battle regardless. Studios can already dynamically generate background extras pretty easily, and I think the idea of a studio owning someone’s likeness forever sets a bad precedent.
Unless I’m mistaken, this is nothing less than humanity’s first big battle over AI and the future of white-collar creative work.
It’s essentially the same thing blue-collar workers lived through during the 70s-90s, as factory work was outsourced to China. The big difference now is that instead of automobile workers in Detroit losing their jobs, it’s people in Hollywood.
We don’t know how much longer this strike will last, but one thing’s for sure. Contracts have expired, production has shut down, and everyone is looking for work. Right now is the best time in decades to be an indie filmmaker, to act in indie films, and to fund indie films.
Keep an eye out for my deep dive later this week. If you ever wanted to invest in a film financing deal, now’s a great time to start. 🎬
Further reading
- This New York bill would protect writers and actors from being replaced by AI
- Meanwhile, Netflix posted an AI job that pays $900,000/year
- Will the strike end soon? Prediction platform Kalshi has a market where you can bet on the outcome
- This could be the first sign of AMPTP softening
- The Washington Post gets it:
- Any prolonged Hollywood strike will likely be a huge boom for the Creator Economy.
- Hollywood strikes and content production costs are incompatible with consumption
- The real winner here is YouTube. Endless variety. Production values that improve each year. And a never-ending stream of free, user-generated content.
Disclosures
- This issue was sponsored by Alts community member Lisa Scott.
- Our ALTS 1 Fund has no investments in any companies or entities mentioned in this issue.
- This issue contains affiliate links to Kalshi
