Streaming and TV companies may have an easier time navigating the Writers Guild of America strike this summer than they have had during past labor stoppages, but disruption will be more significant if the strike continues into late summer and fall.
WGA members began striking in early May, seeking better pay, residuals and safeguards related to artificial intelligence. While this strike likely won’t have immediate, direct impacts on media companies, profitability has been an ongoing concern for the industry. Major streaming companies are projected to incur $9 billion in losses this year (determined before the strike), according to Bloomberg, and revenue disruption has been a challenge for years. (Perhaps counterintuitively, the fact that writers are not working may help mitigate some of these losses.)
Whether the strike continues as fall—when new television programming typically airs—draws near, companies would do well to understand how the issues at the strike’s core are creating shifts in the broader landscape.
Content shift
Consumers continue to give up their cable subscriptions and there has been a remarkable rise in the number of streaming users in the U.S. media landscape. This, in turn, has intensified the competition among streaming companies, prompting an intense battle over content creation to win users.
A noted difference between this strike and the 100-day WGA strike in 2007 is that big streaming companies—which have a significant presence today compared to virtually no presence 16 years ago—have a content buffer of several months. This means that new content can still be released without as much of a need for writers. Major streaming platforms are also putting more of a focus on reality programming, further reducing the need for writers. That strategy has its drawbacks, though; in the long run, users will be less inclined to pay for subscriptions unless the content is high quality.
While the rise of streaming platforms offers writers new opportunities, writing for such platforms was not explicitly covered in the previous agreement between the WGA and the Alliance of Motion Picture and Television Producers (which represents the studios). Another issue in the strike is residuals from streamed content; while writers typically receive additional payment when a broadcasted show gains popularity, they do not receive extra compensation or profit sharing when it comes to streaming.
While the immediate consequences of the strike may not pose content-related problems, media and entertainment companies need to understand how the changes in consumer habits will affect their business model longer term.
Artificial intelligence
Like many other creative industries, the emergence of artificial intelligence, particularly generative AI, raises significant concerns for writers. The looming question remains: will AI eventually replace writers? Additionally, how can we differentiate between AI-generated and human-written content? Currently, we have no definitive answers to these questions. However, it is important to note that generative AI is not poised to replace the role of writers entirely; instead, it has the potential to serve as a valuable tool to assist them. Recognizing this, the WGA proposes the use of AI as a tool that writers can leverage to their advantage, while also safeguarding their rights.
Streaming and TV companies should assess how AI is already affecting their operations and where there may be opportunities for it to disrupt the creative side of the business in the future. Media and entertainment companies would be wise to harness the technological advancements readily available to them, as these can play a pivotal role in boosting profitability through enhanced efficiency and cost reduction. At the same time, businesses need to keep in mind that the successful implementation of an AI strategy necessitates meticulous planning and careful deliberation.
