When the most recent Hollywood strike took place — 16 years ago — the internet had not yet transformed the television and movie businesses. Broadcast networks still commanded colossal audiences, and cable channels were still growing. The superhero boom had begun for movie studios, and DVDs generated $16 billion in annual sales.
Since then, galloping technological change has upended Hollywood in ways that few could have imagined. Traditional television is on viewership life support. Movie studios, stung by poor ticket sales for dramas and comedies, have retreated almost entirely to franchise spectacles. The DVD business is over; Netflix will ship its last little silver discs on Sept. 29.
It’s a streaming world now. The pandemic sped up the shift.
What has not changed much? The formulas that studios use to pay television and movie creators, setting the stage for another strike. “Writer compensation needs to evolve for a streaming-first world,” said Rich Greenfield, a founder of the LightShed Partners research firm.
Absent an unlikely last-minute resolution with studios, more than 11,000 unionized screenwriters could head to picket lines in Los Angeles and New York as soon as Tuesday, an action that, depending on its duration, would bring Hollywood’s creative assembly lines to a gradual halt. Writers Guild of America leaders have called this an “existential” moment, contending that compensation has stagnated despite the proliferation of content in the streaming era — to the degree that even writers with substantial experience are having a hard time getting ahead and, sometimes, paying their bills.
“Writers at every level and in every genre, whether it’s features or TV, we’re all being devalued and financially taken advantage of by the studios,” said Danny Tolli, a writer whose credits include “Roswell, New Mexico” and the Shondaland show “The Catch.”
“These studios are making billions in profits, and they are spending billions on content — content that we create with our blood, sweat and tears,” Mr. Tolli continued. “But there are times when I still have to worry about how I’m going to pay my mortgage. How I’m going to provide for my family. I have considered Uber to supplement my income.”
Studio chiefs have largely maintained public silence, leaving communication to the Alliance of Motion Picture and Television Producers, which bargains on their behalf. In statements, the organization has said its goal was a “mutually beneficial deal,” which was “only possible if the guild is committed to turning its focus to serious bargaining” and “searching for reasonable compromises.”
Privately, numerous studio and streaming service executives portrayed writers as histrionic and out of touch. You can’t make a living as a TV writer? By what standard? The business has changed; get used to it.
By some measures, a major strike in Hollywood is long overdue. Since the 1940s, with a couple of exceptions, strikes have shaken the entertainment industry almost like clockwork — every seven or eight years — usually aligning with upheaval in the fast-changing business. The dawn of television. The rise of cable networks.
“These things gotta happen every five years or so, 10 years,” Clemenza, the weathered Corleone capo explains in “The Godfather,” one of Hollywood’s most storied creations, as the film’s gangster families “go to the mattresses” against one another. “Helps to get rid of the bad blood.”
For generations, ever since the end of the silent film era, Hollywood writers have complained that studios treat them as second-class citizens — that their artistic contributions are underappreciated (and undercompensated), especially compared with those of actors and directors.
Among Hollywood workers, screenwriters have walked out the most often (six times) and were responsible for the entertainment industry’s most recent strike in 2007. It was a precarious economic time — the Great Recession was underway — but “new media” was on the horizon. Apple had started to sell iPods that could play video. Disney was offering $2 downloads for episodes of “Lost.” Hulu was in the start-up stages.
The existing contract between studios and the Writers Guild of America, which expires at 12:01 a.m. Pacific time on Tuesday, sets minimum weekly pay for certain television writer-producers at $7,412. (Agents for experienced writers can negotiate that up.) One problem, according to the guild, involves the number of weeks writers work in the streaming era.
Because of streaming, the network norms of 22, 24 or even 26 episodes per season have mostly disappeared. Most streaming series are eight to 12 episodes long. As a result, the median writer-producer works nearly 40 weeks on a network show, according to guild data, but only 24 weeks on a streaming show, making it difficult to earn a stable paycheck.
Residuals have also been undercut by streaming. Before streaming, writers could receive residual payments whenever a show was resold — into syndication, for overseas airing, on DVD. But global streaming services like Netflix and Amazon have cut off those distribution arms.
Instead, streaming services pay a fixed residual. Writers say there is no way to know whether those fees are fair because services hide viewership data. A new contract, guild leaders have said, must include a formula for paying residuals based on views.
Guild leaders contend that it would cost studios a collective $600 million a year to give them everything they want. The companies, however, are under pressure from Wall Street to cut costs. And gains for one group of entertainment workers would almost certainly need to be extended to others: Contracts with the Directors Guild of America and SAG-AFTRA, the actors’ union, expire on June 30.
Hollywood companies say they simply cannot afford widespread raises. Loaded with $45 billion in debt, Disney laid off thousands of employees in recent days, part of a campaign to eliminate 7,000 jobs by the end of June. Disney+ remains unprofitable, although the company has vowed to change that by next year. Disney is Hollywood’s largest supplier of union-covered TV dramas and comedies (890 episodes for the 2021-22 season).
Warner Bros. Discovery, which has roughly $47 billion in debt, has already cut thousands of jobs as part of a $4 billion pullback. NBCUniversal is also tightening its belt as it contends with cable cord-cutting and a troublesome advertising market.
These companies remain highly profitable. But they have not been delivering the kind of steady profit growth that Wall Street rewards.
Screenwriters come into these talks with notable swagger. In 2019, when film and TV writers fired their agents in a campaign over what they saw as conflicts of interest, many agency leaders figured that the guild would eventually fracture. That never happened: After a 22-month standoff, the big agencies effectively gave writers what they wanted.
For screenwriters, there is also pent-up demand for raises, made worse by climbing inflation. When writers last had the opportunity to negotiate a contract, the pandemic was shutting down Hollywood, and so the two sides came to a speedy agreement — “essentially kicking the can down the road” in the words of Mr. Greenfield. In the negotiation cycle before that, writers focused more on shoring up their generous health plan.
And writers have been incensed by mixed messaging from companies on their financial health.
“NBCUniversal is performing extremely well operationally and financially,” Brian Roberts, the chief executive of Comcast, which owns NBCUniversal, wrote to employees last week, when the division’s top executive was ousted.
Netflix’s co-chief executive, Ted Sarandos, received a pay package worth $50.3 million in 2022, up 32 percent from 2021, Netflix disclosed last week.
“Lots of people are still getting very rich off of Hollywood product — just not the creators of that product,” said Matt Ember, a screenwriter whose credits include “Get Smart,” “The War With Grandpa” and the animated “Home.”
The upshot: The situation might get worse before it gets better.
“Every industry goes through course corrections,” said Laura Lewis, the founder of Rebelle Media, an entertainment production and financing company. “Maybe this is an opportunity to adjust the models for the next phase of the entertainment business.”
“The question,” she continued, “is how much pain will we have to endure to get there.”
John Koblin contributed reporting.