Will Act For Food

“All of our savings were exhausted… We were looking at getting a car and maybe trying to get a place of our own instead of renting, and all of those kinds of goals had to be put on hold because our cost of living is just emptying out our savings.”

That is a quote from a Hollywood-based video edit, part of a study just released by LA-based Otis College of Art and Design on the impact of the Writers Guild of America and SAG-AFTRA strikes on the Los Angeles labor force and what the future holds for employment in Hollywood.

The WGA strike lasted 148 days and SAG-AFTRA 118 days, so the number of people emptying their savings was undoubtedly non-trivial, especially as the Otis report found that compared to April 2023—the month before the writers went out—employment among entertainment workers, actors and writers in particular, declined 17 percent, with 24,799 jobs lost.

But why the Otis report is important is that it points to a larger trend, and that is there will be a longer-term contraction of Hollywood, one that will result in putting personal goals on hold.

The Otis report—titled “The Day After Tomorrow,” perhaps as a gloss on the 2004 disaster film that showed how incremental impacts resulted in a sudden, irreversible, catastrophic change (it dealt with the climate, chaos theory has it that this can happen in a variety of circumstances and industries)—notes that there have been changes to employment in Hollywood for a number of years. Maybe there won’t be a tipping point, but more of a consistent gradual decline in job opportunities.

While COVID caused the most precipitous drop in employment—a 43 percent drop—by August 2022 there was recovery such that the number of people employed in Hollywood nearly reached the ~160,000 from 2016, the high-water mark.

But what goes up evidently must come down because also in August 2022 there was the start of a decline that resulted in a decline of employment by 17 percent by January 2023.

There was an uptick in employment. . .then the strike.

But here’s the money quote in the Otis report:

“Perhaps more worrying than the short-term impact of the strikes is the significant drop in Industry employment that unfolded following the post-pandemic peak, which occurred in August 2022. Compared to this peak, employment in the Industry had fallen by 26 percent in October 2023—a loss of just over one in four jobs in the Industry. Job posting data over the past 15 months confirm these trends. Over this time, there has been a significant slowdown in job postings for all major occupations within the Industry.”

The authors state: “the longer-term trend is uniformly negative.”

In other words, there are fewer jobs in Hollywood after the strike—but not simply because of it. And an assessment of the want ads show that there are fewer openings on offer, so reductions in opportunities for entertainment workers are apparently endemic.

A primary cause for the decline they identify is streaming. The issue is one of too much content—content that is pricy—chasing too few people willing to pay for the services.

Netflix started streaming in 2010 and once other businesses saw how well that company was doing they all, after a delay, seemingly jumped into the fray at nearly the same time: Disney+ and Apple TV+ in 2019, Paramount+ in 2021, HBO Max in 2020, Discovery+ in 2021, then the combo of HBO Max and Discovery+ into Max in 2023.

Every company wanted to have the service that people would continue to subscribe to, so they generated losts of scripted material, which led to a boost in employment.

The Otis report quotes a production worker as saying of the situation:

“And they were making so much stuff that you could work an entire year. Whereas it used to be after a movie ended, I’d be unemployed for a period and go on unemployment.”

Boom times.

But now those companies have hit the hard wall of Wall Street and things have changed.

The Otis report points out that in Q3 2023 Disney+ had a loss of ~$400 million. Bad, but an improvement over Q2 2023, when it lost $1.41 billion. Among the ways the company reduced the losses: a cut production budget.

Fewer productions = fewer jobs.

And it cites the double-digit share price declines of the aforementioned production companies, with losses stemming from the streaming services. What’s more, higher interest rates don’t help because this means money is more expensive to lose.

The conditions are going from “making so much stuff that you could work an entire year” to an entirely different situation:

“Given competitive pressures, the harsh macro-environment, and the strikes themselves—which saw increased labor costs—it would be difficult to bet on a return to 2022 levels of production or employment,” the Otis report authors submit.

Remember: more  thanone in four people lost their jobs between August 2022 and October 2023, and while the strikes did contribute, not as much as one might think.

And looking ahead, things don’t look particularly bright, because, yes, contractual guardrails not withstanding, there is still the inexorable rise of artificial intelligence.

Otis:

“overall, there’s a clear sentiment that, in an industry in which opportunities for actors to earn a living are limited, AI will make things harder by reducing many ‘entry level opportunities,’ and ultimately the number of long-term careers that workers are able to forge in the industry.”

Put the cork back in the bottle.