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Hollywood screenwriters returned to work this week after spending five sweltering months on picket lines, delighted with their new contracts. If, as many hope, high-profile actors can seal deals with studios in the next week or two, the floodlights could soon be shining on Hollywood again.
But any celebration in Hollywood is likely to be short-lived. Disney and other traditional studios’ streaming services have yet to turn a profit, and their once-powerful television businesses are in steep decline.
For writers and actors, studio cost-cutting means that while they will make more money from new contracts, fewer shows will likely be greenlit than during Peak TV, a period that began around 2009. This year is over.
One Hollywood executive said that “the writers did a very, very good job” during the contract negotiations. But he added that the deal would have “impact”.
The executive said, “The anchors’ budgets will be more conservative.” “They will be more cost-conscious. . . . They will develop less content.”
Writers received higher pay across the board in the new three-year deal and the possibility of earning royalties from the hit streaming show. All told, the new package will cost an additional $233 million per year, less than the $429 million they were seeking but well above the studio’s original offer. New actor contracts are sure to increase costs for studios.
Members of both unions insist the studios can afford the pay increases despite the headwinds facing the industry. They point to high executive salaries and the company’s long record of profitability as proof they can afford the expense.
However, after pouring billions into streaming, studios are under pressure to rein in spending on content. Even Netflix has kept its budget steady at around $17 billion since 2021.
The difference is that Netflix makes money, unlike streaming services launched by studios such as Walt Disney Co., Comcast Corp.’s NBCUniversal and Paramount Inc. Warner Bros. Discovery said its streaming business will be profitable this year, but Disney’s streaming business has lost more than $11 billion since its launch in 2019. The business is not expected to break even until next year.
In a rush to turn a profit, most streaming services are raising prices and even introducing advertising, an idea that was once taboo in an industry supposedly driven by ever-increasing subscriptions. But suddenly, old ideas about how to make money from television seem to be back on the table.
Retrotactics that are back in vogue include streamers cross-licensing shows, allowing the original network to continue making money from a show after its initial run. Prices for some streaming services, including Netflix, may also rise further.
Then there are the cancellations of expensive or underperforming shows.Streamers have seemed particularly ruthless about editing shows in recent months, with Hulu also axing shows the best Warner’s Max Weekend Ends winning time Just two seasons later.
There’s also talk of a more radical measure that would reduce options for indulging in a habit almost synonymous with streaming: binge-watching. HBO is a pioneer in this area, regularly releasing popular shows on a weekly basis such as white lotus, succession and winning time.
“Are some of these anchors going to say: Hey, we wasted all the bullets at the same time,” the executive said. “Some people will start (releasing) their shows differently, does that mean they don’t have to make as many shows?”
With belt-tightening back in fashion in Hollywood, the idea seems to have a chance of gaining approval.
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