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

150 points| supertimor | 2 years ago |latimes.com

174 comments

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[+] taeric|2 years ago|reply
I support the strikes and hope it comes to a good conclusion; but this feels a touch forced, honestly. I get that it is in vogue to blame silicon valley, but hollywood has a littered history of killing their goose, as it were.

For fun, consider that if netflix had stuck to the DVD model, they could still be profitable. You don't need a special license to buy a dvd and rent it out to anyone. Just as you don't need a special license to loan or sell a dvd to a friend. You bought it and you can do that.

Now, if studios had their way, they would kill this. Hard. Indeed, they can refuse to sell dvds to companies that they think will then sell to anyone that is renting out in this way. They have tried that with redbox, from my quick google.

That is all to say, no, SV is not the root of the problem here. Atrocious licensing deals and ridiculously baroque rules around streaming/broadcast are far harder to comprehend than anything out of SV. Largely from the influence of hollywood...

[+] lacrimacida|2 years ago|reply
Let me put it in perspective for you: Hollywood the actors and writers are on strike because Hollywood, the money making machinery decided to replace them with a product from SV.

I don’t care for Hollywood and indeed it has gotten quite garbage anyway but I do support the actors and writers striking because they can. For the rest of us it remains to be seen how we’re going to handle it or whether we boil slowly..

In a way they may determine our fate as well. Imagine one scenario where the strike flops, AI is implemented as replacement and all goes well. In this scenario we’re more or less going to follow the same.

I let other scenarios play out however your imagination desires

[+] theptip|2 years ago|reply
My impression was that Netflix came along with up-front pay packages because taking a residual-heavy deal was not attractive back when streaming was unknown.

No mustache-twirling required, just a business model that made sense then and is no longer equitable.

The other point is that extras are getting full-body 3D scanned for a day’s pay, licensed in perpetuity. That is an existential threat to the profession; no actor could ever become a high-paid superstar if a bunch of producers own the rights to their likeness from back before they were famous. That’s the Marvel movies, not Netflix.

As you say, it seems Hollywood has a long storied history of abusing their labor pool at whatever opportunity they get. This is not something they learned from SV.

[+] gumby|2 years ago|reply
As you say the studios are good at killing the goose: tv, cable, VHS: each a huge money spinner and each caught tooth and nail by the studios.

> You don't need a special license to buy a dvd and rent it out to anyone.

Actually the studios strong-armed Netflix into not distributing new disks but maintain a “release window”.

Redbox wouldn’t do this and anyway couldn’t get Netflix’s sweet deal, so ended up asking people to buy disks themselves and send them to Redbox. First sale doctrine makes this legal in the US (as you implied) and the studios could do nothing.

Now Netflix and the studios are in a Mexican standoff and the studios make less.

[+] oldtownroad|2 years ago|reply
Netflix used their magical tech money to compete with studios in a wildly unprofitable way. Netflix churns out hundreds of thousands of hours of content each year at heavy, heavy losses, because they can afford to burn money to force the studios to the table. If we imagine a world in which streaming platforms were only ever licensees and not producers, it’s easy to imagine the status quo could have continued indefinitely. Netflix are a studio, Netflix is responsible for many of their own show creators having zero royalties — look at the squid game financials!

Netflix are not an innocent tech company doing the best for consumers in the face of big bad Hollywood. For all of Hollywood’s flaws, it was a simple business: make something, make money off it, repeat. Netflix brought the Silicon Valley funny money into the picture and threw everything out of whack.

[+] ShadowBanThis01|2 years ago|reply
Not sure who "Hollywood" is in your statement, but "Hollywood" is mostly the studio scumbags who are trying to make actors and writers obsolete; so yes they're trying to harness Silicon Valley technology to do it... but it's still asshole CEOs across the board.

What few articles point out is that these companies have been riding the gravy train for years on the backs of writers and actors, whose union agreed to an absurd and abusive contract LAST time. That's when the same C-suite trash finagled them out of their royalties by whining that streaming was "new media," when everyone the least bit savvy knew that it was NOT "new media" but in fact the new NORMAL.

So now we have people who don't even get benefits, and scrape by on multiple jobs, finally demanding fair pay a decade later... and the studio/network trash are trying to render them homeless. If you think these guys aren't assholes to the core, look at this: Universal Studios vandalized taxpayer-owned trees to DENY PICKETERS SHADE: https://www.cnn.com/2023/07/19/business/sag-aftra-strike-uni...

[+] gochi|2 years ago|reply
Ok, but Netflix has a seat at the AMPTP table. They are the Hollywood you're talking about now.

If Netflix never got into production that would be a different story, but they did so here are the consequences of that.

[+] foundart|2 years ago|reply
Is Netflix a Silicon Valley company? I think so.

The article claims the trend of going big on streaming started at Netflix and the more traditional players followed along. It seems a reasonable claim.

[+] lotsofpulp|2 years ago|reply
> For fun, consider that if netflix had stuck to the DVD model, they could still be profitable.

Netflix is earning multiple billions of dollars in profit per year already, far more than they used to with DVDs.

Also, I expect most people to prefer digital only streaming to any device they have at any time over having to deal with physical disks and single locations.

[+] LapsangGuzzler|2 years ago|reply
> That is all to say, no, SV is not the root of the problem here.

In 2015, %80 of people watched network tv regularly and 50% had streaming accounts. That has flipped in the last 8 years. Total television revenue has declined 35% in that timeframe.

What’s happening to television now is what happened to newspapers 10 years ago: low-cost distribution alternatives disrupted the major networks and created new business models to control distribution and make employees take the financial hit. The fact is that Netflix was first to adopt streaming and did so with vast venture capital backing. This analysis does a pretty good job of looking at the financials of television in the streaming era.

0: https://m.youtube.com/watch?v=PRk5_ohCB70&pp=ygUeU3RldmUgcmF...

[+] DropInIn|2 years ago|reply
> You don't need a special license to buy a dvd and rent it out to anyone. Just as you don't need a special license to loan or sell a dvd to a friend. You bought it and you can do that.

Allow me to introduce you to British Columbia, Canada:

"By law, any person or business that distributes or publicly exhibits motion pictures or Restricted or Adult DVDs (adult motion pictures or “adult videos”) in BC requires a licence. To “distribute” means to rent, lease, sell or supply (or to offer to provide any of these services)."

https://www.consumerprotectionbc.ca/get-keep-licence/motion-...

There's also a whole industry for supplying dvd for rental purposes which charges serial multiples of the retail price per copy and you are legally required to purchase those version and are not permitted to rent out retail dvds.

I learned this when I was going to try to have a used dvd club in a small town and fell afoul of these issues, as it was a for profit venture.

[+] brucethemoose2|2 years ago|reply
My vision of this future is drones dropping off DVDs or USB sticks for "on demand" watching.

TBH, studios would probably have stopped DVD/Blu Ray releases if Netflix took this route.

[+] johnnyanmac|2 years ago|reply
I didn't read the article that way. I think that SV is simply the current catalyst of tech being used to try and justify decreases in quality and/or number for labor. Hollywood seems to either be huffing the same AI fumes or at least want people to believe they have for this iteration.

I guess we'll see how the dust settles

[+] soundsgoodtome|2 years ago|reply
Why don’t we reduce this down a bit? Hollywood studios are businesses. Businesses exist to create value for owners. Hollywood talent is expensive. AI tends to be much less expensive. Hollywood studio execs believe they might be able to replace expensive talent with cheap AI, thus creating more value for owners.

Seems pretty straightforward to me.

[+] renewiltord|2 years ago|reply
If Netflix had stuck to that model they'd be dead.
[+] majormajor|2 years ago|reply
The interplay between SV in the form of Netflix and Hollywood in the last 15 years of streaming wars is interesting but the author loses the plot a bit in trying to connect to Uber, WeWork, etc. By the time those companies were making waves the Hollywood trends were already in motion.

Netflix made waves for sure with original content, but if you look at in another light, it was just an extension of what HBO and other cable networks had already started doing.

And Hollywood initially was much more concerned with Youtube and piracy than Netflix, see the introduction of Hulu as a free ad-supported broadcast-network-based "TV from last night" alternative to piracy.

Hulu borrowed the back catalog model from Netflix as streaming grew, and then eventually started doing its own originals too, which was then also copied by everyone else, including Youtube, ironically enough.

And this was a boon for writers and actors and studious, but at the same time the contracts weren't particularly well thought out (see how some stuff has now been pulled from streaming altogether because the views weren't seen as enough to support paying whatever was needed to make it available at all per contract) or actor/writer friendly in terms of residuals.

So it's a tough time on the backend now since hardly anyone who tried to throw money at content and hope profit followed succeeded (hi Quibi), and the market was oversaturated, PLUS the deals got increasingly talent-unfriendly since the syndication residuals and similar dried up. And now there's the specter of AI too!

But all that was set in motion from 2007-2013, before "magical thinking" about Uber, Theranos, WeWork, etc was mainstream; and even without AI things would be at a head.

[+] rtpg|2 years ago|reply
> at the same time the contracts weren't particularly well thought out

I think they were plenty thought out: Netflix set more or less fixed residuals, which is quite different from “more popularity = more money” for other distribution models.

People were mostly fine with it because most shows were not super popular. But if everything is on it suddenly there is no “high end”. And streamers pulling shows means your “low end” revenue disappears. No mountain to cover valleys, and valleys are getting deeper.

[+] monero-xmr|2 years ago|reply
The economy goes from boom to bust, bust to boom, new technologies and ideas come, the novelty wears off and reality sets in (but the gems stick around!), so on and so forth. One thing that was unique this cycle was the extended period of near-zero interest rates in the rich world - this made the boom very big.

I’m not sure it’s “Silicon Valley” thinking other than as a euphemism for subsidizing losses in hopes of future profits. But now interest rates are up, money is expensive, and justifying investment when 5% return is guaranteed means you need to promise significantly over 5% return. Junk bonds are one thing but highly speculative investments like VC are less attractive.

It’s sad that Hollywood creatives are struggling but they were part of a bubble, just like tech and biotech. Will be a tough 2 to 7 years.

[+] ramraj07|2 years ago|reply
It is caused by tech and by tech quite exclusively by Netflix, for sure. But nothing recent or magical thinking is to blame here. In the past people were dumbly forced to pay hundreds of dollars for a cable package they never truly utilized fully. They bought CDs for 10-15 bucks a piece. They bought DVDs in Walmart for movies they never would have paid any money for otherwise except maybe because it’s now in the discount bin.

One could argue that the per capita entertainment expenditure in the US might have been in the hundred+ dollar range in the nineties.

But now due to Netflix and Spotify that’s not true. Even with all the subscription services it’s a small fraction once you divide family sharing. Thus we are making more movies and shows and music with less money for the total pie. Something’s gotta break. Realistically half the studios or folk making these things just have to stop making them. The industry cannot survive on the smaller pie with so many people eating chunks of it (I mean studios and tech companies not workers). It’ll be interesting to see how this actually ends up working out.

[+] smegger001|2 years ago|reply
there is only so much studios can do to grow their slice of the pie. They can't make much cheaper content reality TV is about as low cost as they can go and not be beaten completely by YouTube. They could make less total content but higher quality that was HBO's modus operandi. But AT&T didn't know how to run a media company and sold them to discovery which is run by a producer of the lowest quality reality TV. so now that's looked at by other producers as a bad strategy even though it more a case of bungled management. from their perspective the only way forward is to cut production cost but the unions probably strong enough to outlast them with new and current productions on hold
[+] pie_flavor|2 years ago|reply
This seemed like a pretty tortured explanation of what's going on here, as though the punching bag was selected before the mechanism was figured out. Then I realized the guy they were citing was Adam Conover, who drafts explanations like that for a living. Mystery solved.
[+] joe__f|2 years ago|reply
Haha I was watching some of him on YouTube yesterday and he has some quite interesting views and choices of topics but I was thinking the whole time, "something about his style is really grating"
[+] tekla|2 years ago|reply
I continue to wonder how much studios are ACTUALLY hurt by this strike. The studios have reserves of money, they still get money from streaming existing content. And short term they can still release content that are in post-prod enough to release.

On the other hand, the public supports of the strike amounts to ... wanting new TV shows and movies. It's annoying for many I'm sure, but its not exactly something that keeps you alive.

[+] AmericanChopper|2 years ago|reply
> the public supports of the strike amounts to ... wanting new TV shows and movies

Nobody in my social circle has taken any notice of it, because movies and TV has become so bad that none of us watch them anymore. Dune was the last Hollywood movie I watched, Oppenheimer and the next Dune are the only movies I’m looking forward to watching. There’s nothing on TV that I watch. I’m somewhat looking forward to the 3 Body Problem adaptation, but I’m expecting it will be bad.

As far as I’m concerned they can stay on strike forever. Let somebody who can do a better job replace them.

[+] brucethemoose2|2 years ago|reply
The studios burned through lots of money for the streaming boom, and the investors want returns from their burned money right about now.

At the other end, streaming services are stuffed with content. I have no proof, but I suspect viewers will learn than the back catalog is pretty good.

[+] JumpCrisscross|2 years ago|reply
> wonder how much studios are ACTUALLY hurt by this strike

Netflix is fine. The others are hurting, but not bleeding, except maybe Discovery. Keep in mind the top-paid actors take in about as much as the top-paid studio heads.

[+] pcurve|2 years ago|reply
The amount of money plowed into creating new content that nobody watch is the hollywood equivalent of the Bridge to Nowhere project, except on the private investors' back.

The volume of content that has been made in the past few decades is enough to keep the entire world occupied for probably the next couple decades.

Human attention is a finite resource and it directly correates to and puts a ceiling on how much the money studios and creators can earn.

We've long past the ceiling and the gravy train has been coming to a stop.

[+] 1vuio0pswjnm7|2 years ago|reply
"The boom times are over. Executives know it. Wall Street knows it. And the story that we're in a revolutionary moment of technological transformation will run out of gas soon."

"Wildly profitable tech companies are citing an as-yet notional recession to make deep workforce cuts. They may have another agenda."

[+] bagacrap|2 years ago|reply
I wouldn't have ever detected this supposed recession if I hadn't been constantly warned of it by the media
[+] johnnyanmac|2 years ago|reply
Are we doubting in a tech oriented community that software had a big boom during the pandemic and that we're returning to industry norms post pandemic? You'd think the near daily large tech layoffs would clue one into the situation.
[+] nine_zeros|2 years ago|reply
Time for SV to go on strike too. Far too many companies have promised far too much to investors.

Now that it's harder to get the same meteoric growth, they are resorting to squeezing workers, RTO mandates and general hand flailing at the expense of employees.

[+] johnnyanmac|2 years ago|reply
At least SV compensates well. Sure you get laid off in 3 years but the gravy train was pretty good in the meantime.

Hollywood, not so much if you're not an A list actor.

[+] jondwillis|2 years ago|reply
> We’ve heard a lot about the ways that studios want to reserve the right to use AI — to create endlessly usable digital replicas of actors, to generate scripts that writers will be paid lower rates to fix up.

Does anyone know of ongoing attempts to achieve these kinds of products now? Seems like vaporware right now

[+] GravelRocks|2 years ago|reply
It for sure is something that people are trying to do. The weird Twitch AI Seinfeld jumps to mind. You can find a few different versions by just searching "script writing AI" or "Movie making AI" but I have no desire to sift through that trash pile. I think we're pretty far away from making something that is appealing outside of the novelty or "so bad it's good."

On the other hand, I'm not sure if you couldn't just use AI to write/generate a lot of children's programming. It's already highly formulaic, parents only halfass pay attention to it, and kids are exactly highly decerning critics. Sure some kids might be very misguided and confused by the AI media babysitter, but is that really any different than what we already have?

[+] ShadowBanThis01|2 years ago|reply
"Seems like vaporware right now"

That's the kind of thinking that these unions fell for LAST time, when they agreed to contracts that treated streaming as some kind of "new, unproven" media... which it obviously wasn't even then.

So the studios have been screwing these people for years, and now they're whining that they're being asked to pay up from here on out. This is like the banks bitching that Obama put a stop to a bunch of their shit after they screwed us for decades. And we're going to hear all that and more if Congress finally acts to rein in another scumbag industry: airlines.

[+] CameronNemo|2 years ago|reply
The product could exist in the future, and the studios could give themselves permission to use their library to train AI models in the contracts. Even if they don't do it this year or the next, actors want assurances that their facial structure won't be ripped off.

Separately, writers don't want to read the trash that contemporary LLMs spew, and readers/listeners/watchers don't want it either, even if a human edited it.

[+] ZoomerCretin|2 years ago|reply
Does it matter? The union wants it banned, so if there are no plans for it, the executives should have no problem agreeing to it.
[+] roody15|2 years ago|reply
Most the writing on TV today is just awful. I support living wages and fare compensation but the quality of programming and writing seems to be at an all time low. Dune was probably the last solid movie I have seen in years … and that’s because it mostly stayed true to a novel written decades ago.
[+] scrubs|2 years ago|reply
Reportedly the 3-stooges were ripped off by the studios who also hid or obstructed or misrepresented how much their stuff made.

But closer today ... I had a two year debate (80s/90s) on Japan conquering some 30% of the US market. The other guy argued state support and price dumping by the Japanese. I argued laziness on the part of American management who did not take quality and process control seriously. I also critiqued US auto labor unions for loosing their minds ie both of them ... since that time and since the decimation of unions since the 60s/70s today's corporate managers are virtually guaranteeing labor will return to strong unions ... stupid pay packages, bad fiscal control, and attempting to squeeze labor hard. ceos will create and legitimize them.

[+] AlbertCory|2 years ago|reply
That's right, LA Times! No one in the whole history of the world ever succumbed to Irrational Exuberance before. It was Big Tech that brought that plague down on us.

Of course, it was 1996 when Alan Greenspan coined the phrase, before Google & Amazon were big, so we have to cover up that fact.

[+] ocdtrekkie|2 years ago|reply
It's worth noting most of this article is spelled out by Adam Conover, the ex-CollegeHumor star of Adam Ruins Everything. Generally speaking, the man does his research.
[+] gumby|2 years ago|reply
I normally consider headlines like this one to be lazy takes but this article, while a bit overwrought, highlights some important points.
[+] prpl|2 years ago|reply
ha, it’s definitely techs fault, and absolutely not related to all the ways hollywood gets creative with accounting when it comes to paying residuals.
[+] brucethemoose2|2 years ago|reply
Yeah.

I drink genAI koolaid. I run llama and other transformers models daily.

...But what some CEOs are saying and doing is just loony.

[+] throwaway14356|2 years ago|reply
The virtual people are coming, the generated scripts are coming, the generated worlds are coming, the glue code is coming. It can probably match the standard sausage. I doubt people will watch a lot of it but who knows. The market for hand made sausage will decline.
[+] 23B1|2 years ago|reply
Hollywood has just as awful economics, b.s. accounting, and snake-oil salesmen as Silicon Valley.

< insert spiderman-pointing-meme here >