Can we solve Hollywood’s strike crisis?

Nick Hilton
7 min readJul 20, 2023
A SAG-AFTRA strike of yesteryear (and yes, that’s Loretta Swit from M*A*S*H)

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I had the strange privilege of seeing the first UK screening of the Barbie movie on Monday. I stood in line at the venue in Leicester Square, in a queue that stretched around the block. Abandoned in the baking sun (a Barbie-queue, you might say) I had time to reflect on the seeming impossibility of saving the global cinema industry.

The latest instalment in the Mission: Impossible franchise had opened, the previous weekend, to middling box office receipts, despite a critical omerta. Tom Cruise, the 61-year-old Scientology and stunts enthusiast, had been credited with saving cinema when Top Gun: Maverick was released in 2022. But just a year later he was being tasked with saving it all again. (Which, I guess, is essentially the plot of Mission: Impossible: save the world, and then do it again in the next instalment).

Barbie has opened to rave reviews, though not from me. It is a cynical, hectoring, 90-minute advert for single use plastics and body conformity. Is that the price we have to pay to save cinema? Or will this doubling down on blockbusters — not least blockbusters who have alternate, non-cinematic revenue streams — just exacerbate the issues faced by the industry?

It is undoubtedly an industry in crisis. At present the Writer’s Guild of America (WGA) and Screen Actors Guild (now combined with the American Federation of Television and Radio Artists as SAG-AFTRA) are on strike. The strike has basically two prongs: firstly, the rise of streaming has changed the way that residuals are calculated (i.e. they’re not), and there’s a fear about the rise of AI impinging on image rights, and replacing, especially, background actors (this is also a key fear behind the writers’ strike). And so the streets of New York and Los Angeles are currently teeming with A-listers on the picket lines, showing solidarity with their minimum wage brethren before being scooped away by Humvees with tinted windows.

The best analysis of the current situation that I’ve read has basically said that the WGA and SAG-AFTRA have strikingly little leverage. Essentially: if you’re about to go on strike, try not to do it at a time when your employer is desperate to cut costs.

For several years, the streaming tail has been wagging the dog of film and TV production. Companies, most prominently Netflix, have bet big on their share price increasing, even if that means spending, spending, spending to increase that value to shareholders. It is, like so many parts of the modern economy, not about making money. No, that’s a crass metric; this is about increasing the stock price. And because Netflix have spent like a terminally ill Rockefeller on a Swiss bender, the rest of the industry has felt obligated to follow.

And then covid came along and suddenly the market opportunity for streaming was massively increased. Disney, the doyenne of theatrical distribution, realised that it had to invest heavily in its streaming platform. Apple followed suit, and Amazon, who were already long in the game, ramped up their spending on a differentiated portfolio of library and live content. An industry that was over-spending a bit became an industry that was overspending like crazy. And then came the end of covid, and the return to a real life — which involved things other than staying at home binge watching Making a Murderer.

Streaming platforms have all witnessed negative growth since 2022. This is spooky if you’re a shareholder who has bet BIG on the continued spend-and-expand model. In recent months we’ve seen Netflix crack down on password sharing (an idea that has, apparently, disappointed shareholders in its returns) and introduce ad-funded tiers to its subscription model. It hasn’t helped that the three big critical successes of the past year — Succession, The White Lotus, and The Last of Us — all aired on a linear cable channel, HBO.

Streaming is the reason there’s a problem with residuals. That’s because, depending on how you look at it, streaming involves either no residual viewing or nothing but residual viewing. Either way, it was perceived as uneconomical for them to offer the sort of generous residual schemes that typified the heyday of cable. They paid massive upfront fees for star talent, but supporting and background actors found it a tough payday. And, let’s face it, their union representatives hugely dropped the ball in foreseeing this issue.

The issue around AI, well… I think that if there’s a precedent set that anyone who’s worried about the impact of AI can go on strike, half the world will be in their pyjamas at 9am on Monday morning. The studio system can only make so many assurances: if you’re a writer working in America, you need to make a coherent argument for your ability to out-perform AI. Or, failing that, find ways of embracing the technology. After all, this is hardly the first time that technology has impacted jobs in Hollywood: think back on those noble men and women who painted the backdrops to sets on old Westerns, whose jobs were entirely undermined by the realisation that you could shoot on location (or, you know, fix it in post).

But crucially, the film and TV studio system is incredibly geographically diversified. The WGA and SAG-AFTRA may have, slightly, drunk the cool-aid of American cultural supremacy. Without the solidarity of the international community, there is little to stop Netflix or Amazon or HBO moving production to the UK or Australia or South Africa or Eastern Europe. And there’s little incentive for any of those territories to show fraternal solidarity with an American media ecosystem that has attempted to establish global cultural hegemony over the past several decades (or, at least, since Michael Eisner took over at Disney).

And so the situation is difficult. Pausing or cancelling productions will likely give the streaming services a bit of breathing room, as shareholders start to take a look at their balance sheets. The fact that theatrical distribution appears to be dead in the water doesn’t help. Here in the UK, Empire, a major chain, has collapsed, while Cineworld, out biggest chain, is in administration. This means that the non-streaming broadcasters, the traditional powerhouses, have to rethink their model too. The $91m of domestic businesses that Mission: Impossible — Dead Reckoning Part One (possibly the clumsiest title in film history) has done is unlikely to allay those fears.

And what leverage do the writers and actors have? The writers = none, sadly. The actors’ solidarity is, therefore, extremely helpful. Pretty faces make a big difference to a movie, and the technology for AI, and the rights implications in that, isn’t nearly developed enough to undercut that. So, long-term, executives will have to get round the table with actors. But actors are also hugely expensive. A-list talent is the major per capita column in any film’s budget (there’s part of me that wants to say: if some of these dudes who are paid $25m a movie earned, say, $1m instead, they’d be extremely well-remunerated and there *might* be more money for residuals). If you’re looking to belt tighten, in the short term, then having a break from Hollywood’s celebrity addiction is no bad thing.

But there has to be a solution, because it’s clear that lower paid actors have been exploited by the streaming system. I mentioned above that there’s a way of interpreting streaming as nothing but residuals. And so, perhaps, one answer to the system is to have significantly lower, or no, advance fees (production companies can contract the actors at minimum wage or higher, say) and have residuals paid out per streaming figures. This is roughly the model that Spotify uses for paying artists, and is famously stingy. I don’t think it’s what the actors, or their union representatives want. The moment your salary is predicated on the success of a project, all sorts of conflicts of interest emerge.

My little idea is that streaming services can outsource some of the residuals as stock options, either to individuals, small PACs of actors, or their unions. After all, the real value to Netflix is in the stock. If you star in a movie for Netflix and that movie is still on the platform 3 years later, you gain an entitlement to X stock at Y price. You could run it almost as a pension fund, in just the same way that executives at Disney and Netflix and Sky and HBO and Fox and Amazon have utilised their stock options as de facto pensions funds for many years. The SAF-AFTRA residuals fund could, ultimately, become a major owner of the Hollywood studio system (just as, you know, the Turkish pension fund, Oyak, owns British Steel, for some reason).

What’s clear is that there needs to be some hard thinking — from writers and actors, as well as studio executives — about whether the current movie/TV business has a long-term future. Compromise may be the name of the game, but at the moment we are in a situation where creatives are going without pay, studios are embracing that diminution of outgoings, and we, the public at home, are going to pay a direct price. For the sake of art, and entertainment, there has to be a better way.

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Nick Hilton

Writer. Media entrepreneur. London. Interested in technology and the media. Co-founder podotpods.com Email: nick@podotpods.com.