Strikes threaten more setbacks for Hollywood in summer of box office flops

CNN
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For Hollywood, 2023 will be remembered as a brutal summer, another kind of dead reckoning. Because bad news has piled up, highlighting a reshaping of the entertainment industry that has fueled uncertainty and sparked an explosion in labor unrest.

The twin strikes by the guilds representing writers and now actors — the first since Ronald Reagan became president of the Screen Actors Guild in 1960 — reflect how the technological shift to streaming is diluting traditional television with unsettled business models and dependent workers. upon them.

Add to this a growing number of consumers watching movies at home, which combined with the lingering effects of the Covid pandemic has led to a major disappointment at the box office.

Summer blockbuster setbacks for studios include “The Flash” (released by Warner Bros., like Warner Bros. Discovery unit CNN), Disney’s “Indiana Jones and the Dial of Destiny” and the Pixar movie “Elemental.” Even Tom Cruise, who saved the theater business with the blockbuster success of “Top Gun: Maverick”, may not be immune, although the jury is out on how many people will accept the invitation to see “Mission: Impossible – Dead Reckoning, Part One” on the big screens.

Disruptions can also be seen in television, where, as Variety reported, the flagship market — where networks secure billions of dollars in advertising commitments — adds to the ongoing struggles of linear broadcast and cable networks.

Even sports giant ESPN has implemented significant cuts to its roster of on-air talent as more consumers cut the cord on cable or satellite subscriptions for a la carte options.

As for streaming, what was once seen as the savior of the entertainment industry, especially during the pandemic, remains a profitability-challenge as billions have been invested in programming. As a result, some streaming services are thinning out their list of available material (so long, “Peak TV”), giving consumers less incentive to subscribe.

A key question has become whether streaming can be reduced as much as added by “cannibalizing” existing forms of distribution. Tony Gilroy, the writer and producer behind the Emmy-nominated “Star Wars” series “Andor,” told IndieWire that the business side of streaming is “distorted and perverse and close to destroying this wonderful industry.”

“The business model has changed,” SAG chief negotiator Duncan Crabtree-Ireland said at a July 13 press conference, “but companies want to lock our members into a contract that doesn’t reflect that change.”

From their perspective, studios and streamers aren’t wrong when they say the business is undergoing major change, prompting Disney CEO Bob Iger to state that the guilds’ contract demands are “unrealistic” in the current climate. Yet Iger made those remarks from an annual conference in Sun Valley, where wealthy media moguls gather to discuss their business, fueling hostility from those on the picket line.

Another problem studios face is that many of their movies and TV shows cost too much to make in a highly fragmented marketplace that can’t be turned around overnight. For underperforming blockbusters like “Indiana Jones” and “The Flash” that have to earn big bucks, rising budgets add to the pressure and losses. Executives fear the new guild contracts will add to the problematic math.

The asterisk — and it’s a big one — is that guilds know so little about the financial specifics of the streaming business that they don’t share widely. Actors and writers who once calculated residual payments can see TV ratings and box office numbers. Today, the streaming world isn’t very transparent, and some have taken it as a reason to call it the “Netflix strike.”

All of these factors, and the uncertainty that accompanies them, help explain why both sides are digging in, recognizing the scale of the issues at stake, as justification for making short- and long-term sacrifices—seeing this as “an inflection point.” For the industry, as actor, director and producer George Clooney said.

Because the projects are being built so far in advance, consumers won’t see the broader consequences of these strikes for some time. But their evolving habits — and their appetite for new technologies like Apple’s pricey virtual-reality headset — are the other unknowns in the equation, including people’s willingness to pay more for entertainment, wherever and however they see it.

Consider this another variable as to whether this count will begin to turn the page on Hollywood’s summer, or point to a chilly winter ahead.