Hollywood's New Dawn Post-SAG-AFTRA Strike

Navigating the Aftermath: Hollywood's Path to Recovery and Innovation

The conclusion of the SAG-AFTRA strike last Wednesday marked a significant turning point for Hollywood, heralding a new chapter for an industry that has been at a standstill for six long months. This resolution reinvigorates the spirit of collaboration between actors and productions and signals a time of recovery and reflection for those deeply affected, including agencies like ours at Hollywood Branded. As we emerge from the shadow of this challenging period, it's essential to examine the profound impacts and transformations brought about by the strike.

These range from shifts in digital content distribution and AI usage to evolving strategies for resilience and innovation within the industry. In this blog, Hollywood Branded delves into the nuances of these changes and explores the future landscape of Hollywood, now poised to regain its vibrancy and creative momentum.

Evolving Trends and Strategies in Hollywood's Next Chapter

This last Wednesday marked a GLORIOUS day for hundreds of thousands of people in Hollywood.

The SAG-AFTRA strike is officially over.  Productions and actors can be friends and co-creators again.  Hollywood can finally get on its feet and get the giant machine of cogs and personalities back to work. 

This was a horrendous last six months for our agency, as we lost millions of dollars in business partnerships overnight when cameras shut down. Despite the odds, a team who pulled together, and this was not our first strike, we still found ways to thrive. I launched Hollywood Branded before the Writer's Strike of 2007, so this was not my first rodeo.  But it was the longest and most bucking-bronco of a ride.  As a Texan, it is a good thing; I learned how to saddle up and ride horses in my youth. ;)

Everyone In Hollywood's Pretty Broke RIGHT NOW

The business loss from this strike is estimated at more than $4 billion.  Now, the actors are celebrating their big win that they are going to get over $1 billion more money over the next 3 years.  If you do simple math the only winners here are the actors as the economy and everyone else took a massive, massive hit that is impossible to make up that lost money from.

We were lucky in being diversified in client offerings, tenacious, and resilient. Yet I know so many who have genuinely struggled through these strikes, losing homes, facing medical crises, and being terrified at not having an income. Despite the strike now being finally over, it will take many people and companies a long road to recover. And the pain isn't over as business losses we're starting to see on the ledgers of the biggest studios, and distributors show red flags shortly for much above-the-line staff, too, until the ship indeed rights.

May commenced with the Writer's Guild of America going on strike and shutting Hollywood down. Then came the Screen Actors Guild - American Federation of Television and Radio Artists (SAG-AFTRA) strike, taking down those remaining few productions hobbling along sans writing staff, those allowed to shoot only if they didn't change a word of the script.

Now, finally, there is genuine relief in sight for everyone.

So, let's take a look at what happened. 

What Happened and What Each Side Wanted

The recent SAG-AFTRA strike and subsequent agreement with the Alliance of Motion Picture and Television Producers (AMPTP) represent a significant turning point in the entertainment industry, particularly in how actors are compensated in the rapidly evolving digital age.

SAG-AFTRA Demands

• Wage Increases: Seeking to keep pace with inflation, SAG-AFTRA initially demanded an 11% wage increase.
• AI Protections: The union sought consent and compensation rights for using AI, particularly for creating digital replicas.
• Streaming Participation Bonus: SAG-AFTRA aimed to secure additional compensation for actors on successful streaming projects, reflecting the industry's shift towards digital platforms.

AMPTP's Position

• Initially, the AMPTP offered a maximum of a 5% wage increase, countering SAG-AFTRA's 11% demand.
• The studios were hesitant about agreeing to the streaming participation bonus and AI protections, reflecting concerns over the cost and the evolving nature of technology in filmmaking.

The Overall Result

The final agreement was a compromise that addressed critical concerns of both sides:

• Wage Increases: The deal included a 7% increase in general wages, further increasing in 2024 and 2025.
• AI Protections: The contract established significant guardrails for AI use, requiring informed consent for creating or using digital replicas of performers.
• Streaming Participation Bonus: The new contract introduced this bonus, marking a significant victory for SAG-AFTRA.

So who won? The actors by a longshot.

Past Strikes and Agreements

The Major (And Some Minor) Deal points

Here's a more detailed breakdown of each section of the 2023 Tentative Successor Agreement that actors just received to vote to ratify... with a very small chance that they will vote no, with the exception of Justine Bateman, who is in the news making statements of unhappiness regarding the AI provisions.

1. Scope, Term, and Wages

   • Covers theatrical motion pictures and scripted content for television and new media.

   • The agreement is effective from November 9, 2023, to June 30, 2026.

   • Minimum wages increase by 7% in 2023, then 4% in 2024, and 3.5% in 2025, with compounded increases. You read that right. Actors are getting 14.% increase in wages guaranteed which will take over the next three years to get there.

2. Artificial Intelligence

   • Establishes guidelines for creating and using digital replicas of performers, including consent requirements and compensation rules.

   • Differentiates between Employment-Based Digital Replicas (created in connection with an employment agreement) and Independently Created Digital Replicas.

   • Outlines specific terms for creating, consenting, compensating, and using these digital replicas.

3. Streaming Bonus for High Budget SVOD Programs & Streaming Payment Distribution Fund

   • Introduces success payments for series with high viewership on SVOD platforms when over 20% of the streaming audience has watched. This is the same as WGA, and it will be interesting to see what new data becomes available publicly as the streamers will have to report metrics.

   • Payment is based on the percentage of subscribers who watch the content within the first 90 days.

   • Includes creating a Streaming Payment Distribution Fund for additional payments to performers.

4. Residuals

   • Increases the salary thresholds for advance payment of residuals.

   • Modifies the residual calculation for high-budget SVOD programs, especially concerning foreign subscriber numbers.

   • Enhances data transparency by requiring producers to provide detailed streaming data.

5. Casting

   • Sets comprehensive rules for self-tapes and virtual auditions, including technical requirements and privacy considerations.

   • Limits what can be requested in a self-tape, such as resolution and attire.

   • Ensures equal opportunity and accessibility in casting processes.

6. Pension & Health

   • Increases the contribution ceiling for TV or new media motion pictures, enhancing pension and health benefits.

   • Proposes a joint study to explore mechanisms to shift contributions between SAG and AFTRA funds.

7. Performance Capture

   • Defines 'Performance Capture Actor' and outlines the coverage of their work in various productions.

   • Specifies conditions under which the agreement recognizes and covers performance capture.

8. Schedule F (and Other Schedule Breaks)

   • Raise the salary thresholds for Schedule F and adjust other schedule breaks to align with improvements.

   • Ensures more performers are covered under better terms.

9. Television & HB SVOD

   • Details rules for series regulars, including option periods between seasons and relocation allowances.

   • Adjusts the definition and treatment of guest stars, including soft work windows and major role provisions.

10. High Budget AVOD

    • Establishes specific terms for productions intended for high-budget ad-supported streaming services.

    • Covers initial compensation and residuals for extended streaming periods.

11. Background Actors

    • Increases wages for general background actors, stand-ins, and photo doubles.

    • Expands the count of background actors to which specific provisions apply.

12. Stunt Coordinators

    • Introduces residual participation for stunt coordinators working on television and new media.

    • Increases flat deal minimums and introduces reminders for mindful scheduling.

13. Singers and Dancers

    • Adjusts compensation for singers required to dance and vice versa.

    • Eliminates separate rehearsal rates, aligning them with on-camera rates.

14. Holidays

    • Adds Martin Luther King, Jr. Day and Juneteenth as contractual holidays.

    • Adjusts the potential duration of the winter holiday hiatus.

15. Equity & Inclusion

    • Focuses on access to healthcare, including gender-affirming and reproductive services.

    • Enhances diversity in stunt doubling and addresses hair and makeup needs for performers of all races and ethnicities.

16. Sexual Harassment Prevention

    • Mandates the engagement of intimacy coordinators for scenes involving nudity or simulated sex.

    • Sets forth clear guidelines for informing and protecting performers in sensitive scenes.

17. Other Provisions

    • Includes updates to animal monitoring, wardrobe allowances, per diem rates, and more. Per Diem is broken down for those curious as $14 for breakfast, $21 for lunch, and $35 for dinner.

    • Revises arbitration panels and makes various other updates to outdated provisions.

18. Strike Suspension Agreement

    • A separate agreement addressing the suspension of strike actions complements the main agreement.

Future Impact and Potential Developments

The reality is that every action taken in the entertainment industry results in positive and negative repercussions, affecting not only net profits but also consumers everywhere.

Impact on Streaming Services

The immediate impact will be on streaming platforms, which must approach royalties in new ways.

• Streaming services may adjust their strategies concerning library content, possibly removing older content to manage residual payments. This could lead to less diverse offerings for subscribers.

• The introduction of different subscription tiers based on content consumption is possible. Lower tiers might offer limited content at a reduced price, while higher levels could provide more extensive access.

• The agreement could set a precedent for other unions and guilds, leading to more robust digital content and technology usage negotiations.

• Discussions and regulations around ethical AI use in entertainment could accelerate due to a heightened focus on AI.

• The introduction of streaming participation bonuses might disrupt traditional revenue-sharing models, leading to a reevaluation of profit distribution among stakeholders.

• A shift to performance-based compensation could occur, linking revenue sharing more directly to the success of a particular show or movie on streaming platforms. This model, however, might undervalue content that doesn't perform well initially, potentially discouraging the production of risky or unconventional content.

Representation and Diversity

• The new SAG-AFTRA agreement could lead to more inclusive casting policies and practices, encouraging studios to diversify their talent pool.

• The stories told are likely to become more inclusive and multifaceted, reflecting society's diversity more accurately.

• The agreement might also influence who works behind the camera, prompting studios to hire a more diverse range of writers, directors, and crew members.

Long-Term Effects on Content Creation

• Studios and content creators may become more cautious about using AI, especially creating digital replicas.

• There could be an increase in the production of original content on streaming platforms to meet higher-tier subscription demands and justify participation bonuses.

• The stock market's response to companies adapting effectively to these changes could be favorable. Conversely, companies struggling with transitions might face investor skepticism, potentially leading to a reduction in creative risks.

• The long-term financial health of media and entertainment companies will be closely watched. New compensation models might affect profitability, but successful adaptation could result in a more sustainable model.

• The success of SAG-AFTRA might inspire similar actions from actors' unions worldwide, leading to a more globally unified approach to streaming compensation and AI usage.

Cultural Export

• These agreements' social and cultural impact extends beyond compensation and working conditions, potentially influencing representation and diversity in media.

• The content produced under these new agreements will continue to shape global perceptions of American culture, enhancing the United States' soft power.

• The standards set by these agreements could influence content production globally, impacting cultural perceptions and trends in other countries.

• Other countries might adapt successful American shows and movies, leading to a cultural exchange where American media influences global content and vice versa to an even higher degree. 

Now What?

The SAG-AFTRA strike and subsequent agreement have set a new paradigm in the entertainment industry, especially regarding digital content distribution and AI. These developments lay the groundwork for future negotiations and standards. Upcoming negotiations with IATSE will further shape the industry, and in the meantime, we can expect a surge in Hollywood content production.

But for now... we're back, baby!  Welcome to Hollywood. 

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