During the last decade and the rise of streaming platforms, writers and actors have been frustrated over studio policy regarding residuals from streaming services; the decline of network television has led to a stronger reliance on other residuals. The Writers Guild of America (“WGA”) strike action began on May 2, 2023, over an ongoing labour dispute with Alliance of Motion Picture and Television Producers (“AMPTP”). Negotiations, which commenced upon the expiration of the WGA’s previous contract with AMPTP, had reached a deadlock, prompting the strike as a tactic to exert pressure. The Screen Actors Guild – American Federation of Television and Radio Artists (“SAG-AFTRA”), raised similar concerns, such as revising compensation, addressing residual payment, establishing guidelines for artificial intelligence usage, and easing the challenges brought about by the industry’s transition towards self-taped auditions. The SAG-AFTRA voted in favour of a strike with the AMPTP. Actors joined the picket lines July 14.  While it appears that the WGA has achieved a tentative Agreement with the AMPTP in September 2023, the duration of the SAG-AFTRA strike remains uncertain. The outcome of the strikes largely hinges on the ability of negotiators to bridge their differences and reach a mutually agreeable contract. Resolving the strikes and addressing complex issues in the entertainment industry demands multifaceted compromise and negotiation from both sides.

Our Intellectual Property team – consisting Mónika Horváth, Mariann Rajnai and Júlia Bokor – have collected the prospective ramifications ensuing from the strike:

The strike’s consequences span different time frames and encompass a range of significant considerations. In the short term, the renegotiation of compensation for performers an writers, especially in the digital age dominated by streaming platforms, emerges as a primary concern. Standardizing rates and implementing profit-sharing arrangements represent viable solutions, alongside the necessity to adapt contracts to the rapidly evolving industry landscape. Collaboration among all industry stakeholders and seeking support from legislative bodies are essential strategies to mitigate future disputes, and exploring long-term agreements could provide stability in the industry. In the intermediate term, a strike could potentially reshape how residuals are calculated and distributed, fostering renegotiated compensation structures for performers, while also prompting studios and production companies to adapt their strategies, including exploring alternative content creation methods and technology adoption. In the long term, the strike may lead to increased transparency in financial reporting and profit distribution, empowering the workforce and potentially influencing global entertainment production and distribution practices.

In August 2023, the first real rapprochement between screenwriters and studios occurred when AMPTP presented an offer that included provisions for writers to receive a minimum of 10 weeks of employment in development roles, introduced a new training system for writers to become showrunners, and offered guarantees against AI-generated content impacting writers’ compensation, credit, or rights. On September 24, 2023, a joint announcement was made revealing a tentative three-year contract agreement between the WGA and the AMPTP. Although the precise terms of the agreement won’t be disclosed until it’s formally completed and shared with the public, reportedly the WGA managed to obtain assurance that artificial intelligence (AI) won’t have any negative effects on the recognition and payment received by writers for their work. The tentative agreement has no impact on a separate, parallel strike by actors. The consequences of the WGA and SAG-AFTRA strikes have been keenly felt throughout the entertainment industry. Production delays, postponed releases, and disruptions to the production pipeline have all taken a toll. Streaming services have been affected, as they rely heavily on content produced by union members. Estimates suggest that the strike has already incurred a staggering cost of over $5 billion, and the studios and streaming platforms are now beginning to feel the impact on their financial performance.