Writers’ Strike II and Digital Ad Growth

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From The Wall Street Journal:

 Hollywood is bracing for a sequel that no one in the industry wants to make: a writers’ strike.

Almost 10 years after a four-month writers’ strike over DVD residuals and digital-platform compensation nearly split the entertainment industry, a new battle is brewing between the Writers Guild of America and the Alliance of Motion Picture and Television Producers, or AMPTP.

The key issues dividing show business this time around include exclusive contracts between writers and television shows, and the guild’s health-care plan, which the television and movie studios feel is too exorbitant.

The current contract is set to expire May 1 and talks have broken off until next week. The WGA membership is expected this week to vote for a strike authorization, which allows its negotiators to call a strike.

The labor tensions are exacerbated by the so-called peak TV era. There is more scripted television in production than ever before thanks to the growth of streaming services and more original programming by cable networks. There will be nearly 500 scripted shows produced this year, according to research by 21st Century Fox ’s FX Networks unit. WGA members say they aren’t benefiting from that growth.

Writers must “participate in the windfall we have created in the last five years,” said “Mad Men” creator Matthew Weiner in a WGA-released video urging members to vote “yes” for the strike authorization.

Executives who were at the helm of the networks 10 years ago warn that a prolonged strike would drive viewers away from television as well as do great harm to the business.

. . . .

A strike would come at a very precarious time for the television and movie industries. Most television networks are struggling to hold on to viewers and adapt to new technologies. Ratings are down for most cable and broadcast networks this season in viewers and the key 18-49 age demographic.

. . . .

While there are more shows than ever, the guild, which represents around 12,000 members, said the average salary of TV writers fell by 23% over the past two seasons.

. . . .

Another WGA bone of contention: Some programs force writers to remain exclusive to a show, making it impossible to compensate fewer episodes with other gigs throughout the year—a requirement also on the negotiating table.

Link to the rest at The Wall Street Journal (Link may expire)

And, for a different view of video consumption, here’s a story from Barrons:

Watch for two key milestones for advertising this year. Digital venues will overtake television as the top draw for ad spending. And mobile, for the first time, will make up more than half of digital.

That bodes well for companies that pull in massive audiences online, especially over smartphones. In the U.S., two stand above all others: Facebook and Google parent Alphabet. Together, they control 54% of digital advertising, up from 44% a year ago. We recommended shares of Facebook five months ago, a few bucks below where they recently traded. Now it’s time for a fresh look at Alphabet, whose shares look likely to top $1,000 in a year, for a gain of over 20%.

In 2017, digital ads will bring in $202 billion—40% of all ad spending, according to industry forecaster Magna. That compares with 36% for television. It’s just a start. Digital spending will continue soaring and will capture a 50% share by 2021, while TV spending will barely expand and its share will shrink to 33%.

. . . .

Nearly all of the recent growth in digital ads has come from search and social media, especially social videos, and small screens are playing a big role. Mobile will reach 52% of digital ad spending this year, according to Magna. By 2021, mobile’s share will balloon to 72%.

Link to the rest at Barron’s

PG says traditional publishers aren’t the only ones being disrupted by developments in the digital world.

31 thoughts on “Writers’ Strike II and Digital Ad Growth”

  1. ‘And in this corner, weighting in at …’

    Who am I kidding? Haven’t actually watched the boobtube in a while. the (720) TV makes an okay monitor, but the tuner hasn’t seen use this year.

    Ntflix has plenty of stuff for me mother to find, so this strike won’t be noticed. (Unless there was a new ‘Father Brown’ series coming out? 😉 )

      • I watch Youtube (we usually watch some while eating breakfast) for educational stuff and entertainment. And Netflix. I likely will not be much affected by a strike here, as a lot of my viewing is either non-television broadcasting or it’s Japanese/Korean TV, and they aren’t striking.

        • Educational stuff such as learning how to drive?

          http://www.weirtondailytimes.com/news/local-news/2017/04/young-driver-gets-help-from-youtube/

          Apr 12, 2017
          KATIE WHITE
          Special to The Weirton Daily Times

          EAST PALESTINE [Ohio] — An 8-year-old East Palestine boy used YouTube videos to learn how to drive his father’s van to McDonald’s on Sunday.

          East Palestine Patrolman Jacob Koehler responded to the restaurant that evening after the police department received reports from several people who witnessed the boy driving the van effortlessly through the downtown area.

          Koehler said that according to reports from witnesses…the boy obeyed all traffic laws, stopping properly at red lights and waited for traffic to pass before making the left turn into the McDonald’s parking lot.

          The boy had his 4-year-old sister along as a passenger. Their parents were back at home asleep after a long day of playing with the children outside in the beautiful Sunday weather, Koehler said.

          “I think there is a good teaching point here. With the way technology is anymore kids will learn how to do anything and everything. This kid learned how to drive on YouTube. He probably looked it up for five minutes and then said it was time to go,” he added.

          • Oh my goodness. Reminds me of when my daughter filled out an application for summer camp, saying she could drive a forklift. She was eight.

            With the parents asleep at the time of this kid’s trip to McDonald’s, can we assume he did this in the dark?

        • Mirtika, Nihon-go hadashimas-ka? Han-guk mal arayo?

          My wife’s favorite YouTube is MD BAEGOPA. Other than that she likes to watch Koreans eating (I swear that’s all they do, and they do it in quantities that would shame Coneheads) and funny animal videos.

          Funny thing is that when we traveled to Japan, the Japanese always tried to speak to her first. She’s Korean, so she looked the part. She doesn’t speak Japanese and sure didn’t then. But I do. Well, did. It’s been years since I spoke it regularly.

          • How can they eat a lot and stay so slim, I’d like to know? 😀

            I just checked out MD Baegopa, but the subtitles aren’t in English. I speak neither Japanese nor Korean. Although when I’ve watched non-subtitled Japanese dramas, impatiently, I found I could understand quite a bit. I supposed 9 years of watching J-doramas and anime teaches you something. 😀

  2. > Subway, for example, essentially tried to re-create its in-store experience on the small screen.

    So it will take five minutes of waiting before spending another five minutes repeating yourself before it makes your order wrong anyway?

    Subway’s “in-store experience” is the major reason I haven’t darkened their door in years.

  3. I dunno but when I see all that talk about peak TV and 500 scripted shows, the first word that comes to mind isn’t “windfall” but rather “bubble”.

    The number I don’t see anywhere is “total viewer hours”.
    When Microsoft brags about XBOX LIVE, they cite their usage in billions of player hours. Amazon brags about KU in terms of total pages read. Those numbers reflect user engagement and the size of the market.

    On the broadcast TV side all they talk about is fractional numbers or single show viewership without ever addressing the single key question: are more people watching more TV? And how much of that viewership is ad-supoorted? How much is ad-free?

    Because I’m thinking that NETFLIX is closing in on 100m subscribers and Netflix is almost totally ad-free. (And their ads are house ads anyway.) Prime Video is mostly ad-free. Hulu and CBS ACCESS have ad-free options. HBO has grown its viewership and HBO is ad-free. Video downloads keep growing and those are ad-free. In other words, a lot, if not the majority, of the increasing streaming viewership is going ad-free and unless total viewing is up dramatically, ad-supported video is likely flat at best. Throwing more content into the chase for eyeballs is only going to fragment the flat market even more.

    Especially since a lot of those added shows are 8-13 episode seasons instead of the traditional 20-23.

    I’m wondering if those ad dollars they are fighting over are delivering as good returns as they used to in the past. Because throwing more money into a stagnant or declining market is what bubbles are made of.

    And bubbles always pop.

    The writers guild sees a gold rush and they might be right on a short term basis. But in the long haul…

    The trends I see are away from broadcast and towards direct pay and aggregated subscriptions. And the bigger studios are moving that way. Certainly TimeWarner and CBS are.

    • My wife and I watch scripted shows almost exclusively on-demand with very few exceptions when we HAVE to watch what happens next (like Game of Thrones). Sure, we binge watch certain shows, but Netflix has also reprogrammed us to watch what we feel like watching at that moment… be it a SitCom before bed, an action-filled drama while we eat dinner…

      Sports will likely be the last bastion of broadcast television. And while games are starting to be live-streamed, I don’t know if that will ever fully take root except in cases where it adds eyes that would otherwise not be able to watch it on their television–example: people who are not subscribed to NFL Network being able to watch a Thursday night Football game on Amazon Prime.

    • I signed up for CBS All Access, minus ads, but it was just so I could watch The Good Fight (which wasn’t broadcast anywhere but online). Trouble is, there were only ten episodes. There’s no other web-only show to keep me subscribed.

      • Many of those shows are on CBS.com but only the last 3 episodes. We’ve always watched The Amazing Race, and pretty much what we do is make sure we watch it from the website every week or two. We can watch it when we want, if we want. We run a cable from a Mac to the big TV, it’s no problem.

    • “And bubbles always pop.”

      It might be a bubble, but it’s more likely to deflate slowly like a balloon rather than pop. And it might get bigger rather than smaller.

      Once the networks stop producing new shows, they are dead. And there will actually be more and more pressure for them to spend more money on bigger shows with shorter runs. (Because broadcast repeats are dying.) Because audiences are less patient, there will probably be more shows running for shorter periods of time. Very popular shows can still get very high ratings, even though they are rare. So there’s a lot of pressure to hit shows out of the park. And the networks are owned by huge companies that can, if necessary, run them at a loss, just to keep their influence.

      Meanwhile, new players like Amazon, You Tube, Hulu and Netflix (and soon Apple) have a lot of incentive to also make original shows. Most will probably lose money, but they are also very big companies that can afford to blow a lot of money in the hopes of finding a home run that will promote their services.

      Add into that all the cable channels, Lifetime, FX, etc. that are also desperate to stay in the game. They have to keep producing original stuff or they will lose relevance.

      Where does it end? I’m not sure it does. In a funny way, it’s just the same thing happening with indy publishing but with lots of money behind it. Thousands of writers are willing to do anything to establish themselves as authors. They write and write and self-publish book after book, hoping for a hit. They give away freebies and keep at it until they finally succeed. Some drop out, but some keep playing even with little results.

      TV shows aren’t that different, except they have rich pocketed companies behind them. They are desperate to find that hit, and will to blow crazy amounts of money to either establish themselves or stay on top.

      At some point, wiser folks at the top of these huge companies might say it’s crazy to keep spending money producing shows when most of them lose money. But I don’t think that’s certain. Look at Broadway, 4 out of 5 Broadway shows (these are the ones that raise money and get a theater) fail. But there are still plenty of rich people that want to play that game. Same thing in indy films (and even to a large extent studio films).

      • One problem the networks, both cable and broadcast, face is that viewers want ala carte lineups and the cableco business model is built around bundles that deliver revenue to *all* the channels in the bundle, including the broadcast networks.

        A second problem broadcast faces is that the current digital broadcast standard is likely the *last* broadcast standard we will ever see. Video is moving to 4K HDR and even higher standards which can be easily accomodated via broadband and don’t depend on public airwaves. As broadcast viewership declines there won’t be much demand for an updated broadcast standard. The future is in fine-grained “narrowcasting” where each studio runs its own paid streaming service, much like CBS, HBO, and CW (currently free…for now) and won’t depend on cablecos or broadcast affiliates.

        Third, at some point declining viewership will force a consolidation of channels (though not of media companies, since that already happened). That is the bubble that can pop; the channel bundle model. Two many channels depend on the hidden subsidies in the cableco bundles.

        I’m not saying it is imminent but neither is it decades away.

        • The video industry is under tech disruption but what is being disrupted is distribution and financing, not production.

          A lot like trade publishing.
          Unlike trade publishing, the (savvier) studios are positioning themselves to gracefully transition to the new distribution system. Which is why I see a collapse of the 24×7 channel system in favor of ondemand, mostly paid-for, streaming. Hulu, HBO, SHOWTIME, and CBS ALL-ACCESS are already there. The rest will follow as broadcast keeps withering away.

          But there’s a tipping point ahead. Pop.

        • “… at some point declining viewership will force a consolidation of channels…”

          I don’t see why that would happen. The whole point of the digital revolution is that it becomes easier and easier to create new channels.

          In fact, despite shaky economics, Fox keeps adding cable channels. FX, FXX, etc. HBO keeps adding channels. Once you have a big library of entertainment (which all the big media companies do) it’s pretty simple to create a channel using your old library to fill time. Doesn’t cost a whole lot.

          But then, how do you get people interested in a channel that just has old programs? You make a new signature program. So, again, you have an incentive to create new hot programs that don’t have to be directly profitable, but help create a new brand for your channel.

          All the talk about declining channels seems to be wishful thinking on the part of executives hoping for less competition. Remember, we still have AM radio, even though it’s really silly at this point. Once someone has put the time into creating a distribution channel, it takes a lot for them to shut it down. And digital distribution channels cost little to maintain.

          And lets suppose, for example, that Fox gives in and kills FX and HBO cuts their number of channels and MTV folds VH1 etc. All they would be doing is giving a smart programmer more opportunities to compete by creating a new channel, say on You Tube where it costs nothing to set up. Or simply a direct online channel.

          I don’t see a collapse coming unless the big companies can lock up the internet and limit distribution of new programming. And that doesn’t look likely. There are too many rich players that are willing to take a chance to become a mini-studio.

          • 24×7 channels?
            Youtube channels drop two-three episodes of 5-10 minutes a day. Most only drop a couple a week on average.

            Contrast it with the specialty cable channels trying to feed 2-4 hours of new content a day. That gets pricey even with retreads filling the other 20 hours. If the industry moves to ala carte the way consumers want to, most of the broadcast channels on cable would fold. Or get folded together.

            Have you looked at the pricing and catalog sizes of the streaming Channels Amazon hosts for their Fire TV line?

            https://www.amazon.com/b/?ie=UTF8&filterId=OFFER_FILTER%3DSUBSCRIPTIONS&node=2858778011&ref=DVM_US_JK_PS_b_COADDONSUBS2|c_13713146660_m_xrLM7Wtj-dt_

            That’s the kind of business many of the subsidized channels can look forward in an on-demand world. Not pretty.

  4. I would love to be a ‘scab’ and break into scriptwriting if said strike were to happen. 🙂

  5. With all the on demand series available, the writers have a weaker position than they did last time.

    • Actually, it’s the opposite. Ten years ago, there was no streaming… streaming makes up its content with scripted work.

      Ten years ago, Networks did a lot of talk shows and reality shows to counter. They had no competition. This year it’s different, because if scripted network shows go, folks will just go to streaming shows they have lined up to watch.

      And if they do, they likely won’t come back to network shows. I cut cable and I don’t miss the shows I used to watch, because I found new shows on streaming.

      Viewers have more options this time around, and eventually they’ll need writers for them… streaming services have been very aggressive in courting talent, too.

      Networks are making a big mistake if they think this year will be a replay of ten years ago. And the asks by the guild are not that big, either… this is more a power play than anything else.

      So the writers are actually in a stronger position, imo.

      But no writers WANT to strike, they basically want their fair share.

      • Are you really sure?

        http://www.investopedia.com/news/netflix-aims-fifty-percent-original-content-coming-years-nflx-amzn/

        Netflix wants to run 50-50 original content…someday.
        Today they run around 20%.
        It adds up to 600 hours of original content a year or roughly as much as one broadcast Network. Less than two hours a day’s worth.

        Amazon has higher visibility originals but less of them and the same is true of Hulu. Also, a good portion of Hulu’s “originals” isn’t; they’re foreign content licensed or coproduced.

        The bulk of the streamers content is, just as with ebooks, the backlist. Especially recent backlist. A strike won’t hurt them noticeably. It might help by weakening broadcast even more.

        More importantly, what weakens the staff writers’ position is that the streamers don’t work to deadline like broadcast. Since they typically airdrop their shows as a single package, they don’t schedule them until they’re fully filmed. Any delays from a strike will have zero impact on them.

      • Viewers have more options this time around, and eventually they’ll need writers for them

        Eventually can be a lot longer this time. Writers are in danger of overplaying their hand.

  6. the one thing they need to change is the exclusivity requirements. If they don’t prevent the writers from earning money when they aren’t needed for the show, this wouldn’t be the big issue that things currently are.

    • And if the networks get less money and less eyeballs they’ll have less money to give to the staff writers and less incentive to pick up new shows.

      The broadcast business model is already frayed enough. Giving the networks more incentive to dump it is not going to result in a bigger pie to fight over.

      They might win the battle and lose the war.

      • Uh, no… all I can say is that’s not how it’s forecast nor described.

        A strike hurts everyone, it’s true… but the networks have more to lose if they lose viewers permanently. so I am not sure what angle you’re coming from, if you arrive at that conclusion.

        There are great resources on Twitter, however, just do a search, WGA strike, and read away.

        • Simple: if the networks lose viewers, they lose revenue. No revenue, no projects. No employees.
          So going on strike until it forces the networks to cough up more money per show would mean less shows on the networks and less jobs writing them.

          It’s happened before.
          The law of unintended consequences is a very real thing.

          And Peak TV implies a reduction is coming.
          And it is.

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