What we need is a big dose of Kool and the Gang!
LA’s streaming gold rush is over. Film and TV workers have been left in the dust.
Media and tech companies poured hundreds of millions of dollars into Hollywood as they built shiny new streaming services. Now they're aiming their firehose of money elsewhere, and actors, writers and behind-the-scenes workers are suffering.
Max Knoblauch, Sherwood Media
9/18/24 7:02AM
LOS ANGELES—Alex Zaragoza, a TV writer who has worked on shows like “Lopez vs Lopez” and “Primo,” has been out of work for a year and a half. She knows that’s part of the gig in the freelance world of TV writing, but things have felt different lately.
“Fluctuations are happening in the industry at the highest level, which are undoubtedly affecting anybody that’s doing the nitty-gritty work — writing the shows, production work, costumes, makeup, the key grips,” she said. “I literally have my face in my hands like, when is it gonna get better? When are we gonna work?”
Zaragoza hopes she’ll be lucky enough to get staffed on a TV show again next year, but her priorities have shifted to survival mode.
“Right now my concern is finding a job,” Zaragoza said. While hiring is slow, she’s been freelancing for news publications and putting together spec scripts (uncommissioned, original work) to try to keep her name in the mix. “It’s frustrating and it’s exhausting. Like, really exhausting.”
She isn’t alone. Hollywood — already home to famously hard-to-get and rarely long-lasting jobs — is experiencing a devastating labor contraction. Unemployment in film and TV was at 12.5% last month, the industry’s worst August since at least 2000, the pandemic notwithstanding, and nearly triple the national unemployment rate, according to federal jobs data.
Thousands of workers in every corner of the entertainment industry, both in and out of Los Angeles, have found themselves without a job or even many prospects. Hollywood’s motto this year has been “Survive till ’25” (though many writers say it feels more like a survive till ’26 or even ’27 situation at this point).
A big reason is that the streaming industry — made up of services from Disney, Apple, Paramount, NBCUniversal, Amazon, and others — is pulling back from Hollywood. In 2019, the industry was flooded with cash as networks and tech companies built their own streaming services, cannonballing into the business and hoping to win Wall Street’s favor in the same way Netflix had. About 600 scripted TV series aired in the US in 2022, according to FX, double the total from a decade earlier in 2012.
But several years into their streaming endeavors, those companies are commissioning fewer original shows and injecting less money into the Hollywood economy.
In speaking with dozens of film and TV workers — including writers, actors, directors, producers, and executives — one thing is universally true: nobody ever thought working in film and TV would be easy. Still, not many of them expected things to get this bad. In June, the industry’s unemployment rate was 16.1% — a figure that “Merry Little Batman” writer Morgan Evans said was “worse than half as bad as the Great Depression.” Nationally, unemployment hit 24.9% in 1933.
Evans, who is also a director and producer, said morale in Hollywood right now is as abysmal as he’s ever seen it, and not just for writers and actors, who are typically more accustomed to gaps in employment. Salaried employees working in marketing, development, and accounting — traditionally safer, more stable careers than the freelance creative side — are also struggling to find and keep work.
“A lot of my friends have been laid off from places like Paramount, Amazon, Twitch, Netflix, and especially Warner Brothers Discovery,” Evans said. “It just feels like nobody is on stable ground, regardless of the path you chose, if you’re working in Hollywood.”
No major streamer wanted to speak on the record for this article.
Zaragoza had one of those theoretically safer jobs. She was hired to work on a Netflix editorial site called Tudum in late 2021. Though her pay was hourly, it amounted to an excellent annual salary in any major city, and many of her coworkers had been recruited away from high-profile institutions to write there. But Netflix laid off Zaragoza and several of her coworkers at Tudum after just five months.
To cut costs and trim losses, studios and entertainment companies have laid off thousands. Shortly after it broadcast the Super Bowl, in February, Paramount cut 3% of its global staff, or about 800 jobs. Last month, it laid off another 2,000 US employees, primarily in its marketing and communications divisions. Netflix, NBCUniversal, Amazon, and major talent agencies including CAA and UTA have also cut jobs. One TV exec called the situation a “full-scale depression.”
Streamers have also shifted their focus away from original TV and into other endeavors, like live sports.
Shooting days in LA were down 33% from their five-year average (excluding 2020 because of Covid lockdowns) in the second quarter, according to the city and county film-permitting office FilmLA. The number of original US seasons of TV fell 14% last year, the steepest drop on record, and FX President John Landgraf has predicted another steep drop-off this year. “Peak TV” has been declared officially dead.
“Oh shit, we need to make our own Netflix”
In the late 2010s, Wall Street fell in love with Netflix’s ad-free, low-cost subscription model, and its stock soared. Major networks rushed to copy it, shifting their budgets away from cable and broadcast TV and toward their new streaming services.
Adam Conover — the creator of TruTV’s “Adam Ruins Everything” and Netflix’s “The G Word” — refers to the industry’s pivot to streaming as “essentially the biggest strategic misstep in the history of business.”
“The core of it was these companies saying, ‘Oh shit, we need to make our own Netflix.’ That’s ludicrous,” Conover said. “The big thing is, they killed advertising. These companies’ customers for 100 years have been advertisers. And then they go, ‘Let’s blow up the entire model and just have five HBOs.’”
Companies spent years building their own streaming products, pouring money into production to entice subscribers with original content. Disney gave “The Mandalorian” $120 million for its first season. Netflix spent $200 million for its original film “The Gray Man.” Amazon spent $250 million just for the rights to make “The Rings of Power” — and it spent another $465 million to make the first season of the show.
But in April 2022, everything changed, according to many of the sources Sherwood interviewed for this article. Netflix put out an earnings report that revealed its first drop in subscribers in a decade, sending its shares plunging 35% and chopping $50 billion off its market cap in one day. That report sent ripples through the industry, causing major studios to begin to question the validity of the business model that, up until then, they’d been racing to copy: one that poured millions of dollars into as much content as possible and offered it to subscribers — largely ad-free — for a low monthly price.
“It felt like during Covid, everyone you’d talk to standing in line at a Blue Bottle had sold an animated series,” Evans said.
No more. For the rest of 2022, streamers and studios worked to slash costs, and the number of new series began to dip in the second half of the year, despite the full year ending as the peak of “Peak TV.” That’s when Evans noticed a shift in how Hollywood operated.
“Really that's when the fire hose that had been spewing money since Covid — and really a bit before — completely shut off,” Evans said. “I really started to notice a sizable shift in the industry, that whoever you were pitching to had no ability to say yes or no. And oftentimes their bosses had no ability to say yes or no. And it became very clear that there were mandates from way on high, even from outside of the traditional studio system, that were kind of dictating the way the industry was headed.”
Nearly five years into the streaming revolution, profit is still proving elusive. Though the five major streaming services reported a collective $3.2 billion profit in the first half of this year, more than 100% of that sum can be sourced back to Netflix, whose profit reached $4.5 billion during that period. In August, Disney’s streaming business reached profitability. But for companies with old-TV assets, streaming income isn’t making up for plunging cable-network valuations.
A person familiar with spending at one major streaming service said in an interview that there has been a restriction in content spending across the streaming landscape. That person qualified, though, that the decrease is perceived to be bigger than it actually is, and has to do with consolidation across the industry.
The model that streaming blew up is cable, and its slow death drags on, with the first quarter of this year marking pay TV’s worst ever in terms of subscribers lost. The second quarter saw another 1.6 million subscribers cut the cord. And last month Warner Bros. Discovery and Paramount slashed the valuations of their cable businesses by more than $15 billion combined. AMC Networks reported a $97 million hit to its ledger, and saw US ad sales fall 11%.
Content decisions by streamers have major ramifications for employment in the industry: as of last year, half of TV-writer employment was from streaming. And while their content spending spigot has certainly tightened (and shifted overseas), it’s not exactly about a lack of cash. Overall content spend is actually expected to grow 2% this year. But as streaming replaces linear TV and cable, its offerings are diversifying from big acquired-content libraries and dozens of original shows to other expensive entertainment options like live sports.
Many working in Hollywood see sports deals eating into scripted and original programming.
“The big thing that we’re really concerned about is the spend on the NBA,” a representative at a large firm that manages film and TV writers said. “If they’re spending billions of dollars on that deal, that’s just going to take away from scripted programming, right?”
According to research firm Ampere Analysis, Disney’s forecasted $36.1 billion in overall content spend this year will be split between originals ($16.5 billion), acquired film and TV ($10.3 billion), and sports ($9.4 billion). NBCUniversal’s $24.8 billion projected content budget will see $10.8 billion spent on originals and more than $9 billion directed toward sports.
To be sure, there are other reasons contributing to the industry downturn. Some see its roots in the pandemic, which forced production to shutter for months and led to dozens of film and TV cancellations. But the entertainment industry, for the most part, appeared to have bounced back quickly, with the July-to-September period of 2021 marking LA’s third-best quarter in 26 years in terms of on-location filming. Shooting days surged 141% from a pandemic-stricken year earlier, according to FilmLA.
Others have pointed to last year’s strikes, which lasted six months and again led to myriad cancellations. But if the current contraction were a reaction to the heftier contracts achieved by unionized writers and actors, it would logically follow that nonunion productions would be faring better. Instead, the production of largely nonunion reality TV in LA is down 57% year over year, and unscripted budgets are being slashed.
“How long can you really last out there?”
Ben Flores, after years of trying to break into television, landed his first professional gig on a show a few months before last year’s writer strikes. He hasn’t been able to get a second. Outside a few friends who’ve returned to writers’ rooms for new seasons, he knows only one lower-level writer who’s been staffed on a fresh project in that time. The contraction, Flores says, has trickled into the traditional process of searching for and developing new talent and voices.
“I’ve met with a couple companies where the line this year has been pretty firm that they’re not staffing and they’re not looking to put anything new into development,” Flores said. “Among writers, particularly lower-level writers, working nonindustry, non-writing jobs is much more commonplace now.”
So far this year, the Entertainment Community Fund — a charitable org that provides emergency financial assistance to performing-arts workers — says it has given out more than $5.6 million to almost 3,000 people. The fund has doled out an average of between $200,000 and $300,000 every week, nearly four times the weekly average from the first half of last year and six times the prepandemic average.
Keith McNutt, the executive director of the ECF’s western region, said that hike has been accompanied by an increasing need for mental-health services, career services, and support groups.
“We will continue to expand our career services that help people identify transferable skills and find new or additional kinds of work,” McNutt said in a statement. “This is essential during a time when the industry and the nature and location of its jobs are changing so much.”
The contraction has hit executives, too, with some estimating that the VP-and-above exec workforce across entertainment has shrunk by 20% since last year.
“It’s just a calculus of, well, how long can you wait for the right opportunity to come, and how many steps back are you comfortable taking?” said one scripted-TV exec at a midsize studio who requested anonymity. “It’s always been a war of attrition, but how long can you really last out there until you just have to make a decision for your family?”
The few open executive jobs are being filled by execs with much more experience than needed, they said, with many taking six-figure salary cuts just to get work. Several of their peers have left the industry altogether, taking MBAs and law degrees to other industries. It’s a major sunk-cost decision, given the years of low-paid work as interns and assistants the career typically requires for those without major connections.
Hollywood is getting smaller
Between 2009 and 2020, megamergers in media totaled more than $400 billion, with major deals like Disney acquiring Fox for $71 billion. Since then, even more consolidation has happened: Discovery acquired WarnerMedia from AT&T in a $43 billion deal to create Warner Bros. Discovery in 2022, Disney bought out Comcast’s $8.6 billion share of Hulu last year, and Skydance is seeking approval to merge with Paramount in an $8 billion deal expected to close in the first half of next year.
While Wall Street tends to smile at entertainment merger news, Hollywood workers groan. Each acquisition decreases the overall number of buyers for films and TV, adding more weight to any one buyer’s decision to cut spending or shift content strategies.
“Let’s say seven years ago, you would take a pitch out, and you might pitch it to 10 to 12 buyers. Generally now when we take a show out, there are maybe four buyers for it,” one scripted-TV exec said. “There are fewer buyers, and the ones that are still here are becoming more hyperspecific about the parameters for what they’re willing to make.”
A handful of sources including writers, representatives, and execs said the smaller number of buyers has also created a shorter time window for buying guidelines. Where previously a network would be open to buying, for example, “female-driven dark comedies” for the better part of a quarter, those types of requests can now come and go in just weeks, or even days.
According to Conover, vertical integration of production and distribution is also playing a big part in the contraction. Essentially, when the buyer is also the production house and the distribution network, seemingly small strategy shifts can produce a butterfly effect.
“Hollywood used to be a non-vertically integrated town where you would pitch your show to a studio. The studio would make the show, and then they would shop it around town. And that is basically impossible at this point,” Conover said. “Now it's like, you go pitch Netflix directly, and Netflix says yes or no to you.”
The line between production, distribution, and exhibition was further blurred in 2020, when a federal judge overturned the Paramount Consent Decrees — an antitrust ruling over 70 years old that barred studios from merging with theaters. In June, Sony purchased Alamo Drafthouse, North America’s seventh-largest movie-theater chain.
So what’s next?
While Hollywood workers try to hold on through the current upheaval, the industry is attempting to figure out its next plan. For now, studios seem to be betting that everything old can be new again. Cable-style bundles are on the rise, and streaming ad tiers are winning over customers with lower monthly subscription fees. They also happen to make the streamers more money.
“They are capitalists. They will eventually figure out how to make money again,” Conover said. “There's going to be more bundling and there's going to be more free services, and that is going to help prioritize different types of content.”
"Stranger Things" Season 4 Premiere
Members of the cast of “Stranger Things” in New York at the premiere of the series’ fourth season. That season cost Netflix an average of $30 million per episode. (Photo by Theo Wargo/Getty Images)
Streamers’ attempts to rebuild cable’s business model could see companies copy more than just its bundling strategy. In the near future, streamers could experiment with introducing show formats that have traditionally had larger episode orders like procedurals, sitcoms, late-night television, and game shows — formats they’ve mostly embraced only through licensing deals so far. That future, many sources said, could provide writers, crew, and actors with more steady employment.
There’s some evidence that it’s already starting. Netflix, seeing the success of licensed IP like “Grey’s Anatomy,” recently ordered medical procedural “Pulse,” with one scripted exec saying they’d be surprised if it got only eight episodes. Warner Bros. Discovery’s Max gave a new “ER”-influenced medical drama, “The Pitt,” a 15-episode order. Amazon Prime Video, which introduced ads in its default tier this year, ordered a new version of “Jeopardy!” in May.
And on the cable side, more buying is on the way. After holding NBA media rights for 30 years, TNT, under Warner Bros. Discovery, lost out on the league’s latest deal. Its plan to fill its NBA-sized hole? Original scripted programming and movies.
Still, these are rosy outlooks and the prestige-TV era tends to lean toward endings with a bit more bite. There’s also the remote chance that one of the tech titans currently entertaining the film and TV business decides to pack up and exit altogether, which would make things worse for Hollywood workers before they get better.
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