Rushfield: Streamers' Catch-22 in a Strike
33 days to go: Netflix, Apple and Amazon — the next move is yours
This story originally appeared in The Ankler.
As the sands of time run low on the Writers Guild negotiations, lunch tables across town are aflutter puzzling over "Is the strike really coming?" and if so "How long will it last?"
These conversations tend to go in circles because they are missing the key data point.
It should no longer be considered a question about what the writers will or won’t do, but whether the studios/streamers are willing to concede anything to stop this. Although opinions may vary about what writers should focus on, there is near unanimity about the need for a big reordering, and near unanimous determination to walk out if concessions aren’t forthcoming.
But let’s push a little harder, it's not even what will all the studios do. For nearly a century, the legacy studios prospered in a world of livable wages, free of mini-rooms, and there is every reason to think that if this were their fight alone they'd work all this out more or less fine with no more than the standard-issue acrimony and backbiting.
What's left then is the only question that really matters in this whole affair.
At what point will the pure streamers (Netflix, Apple and Amazon) make significant concessions to rebuild the profession their new businesses smashed?
I’ll caveat this by saying they may well be making significant concessions this very day at the negotiating table, in which case a strike likely wouldn't happen.
Or it could take them months of a shutdown to step up to the table, in which case the strike will be very long indeed.
(A second question that may alter the first: at what point do the legacy studios, entangled with their own money-losing streaming units, break with the pure streamers? More on that below.)
The fate of Hollywood now rides on the intents of Messieurs Sarandos, Peters, Jassy, and Cook, and getting inside their heads is our job today as we attempt to game out where all this is going. As Jeeves reminds us, it all comes down to the psychology of the individual. In this case, four individuals whose perspective on this is the reed on which the industry hangs.
First of all, we can look at how they have dealt with previous labor uprisings. Netflix in its brief life hasn't really dealt with much in the way of big collective bargaining moments, so we'll set them to one side for the moment. Apple and Amazon on the other hand, decidedly have dealt with labor activism and if past is prologue, we're in for a long hot summer.
AMAZON
Amazon, of course, as far as labor questions go, practically has become synonymous with the swapping of old economy middle-class job for brutally dehumanized shipping and delivery positions, as portrayed in Nomadland, which featured an actual Amazon warehouse as the emblematic gig in a rootless economy. That this vast box-stuffing workforce has been non-union is precisely the point of the company's disruptive effect.
Conditions at Amazon's fulfillment centers repeatedly have been cited by OSHA investigations. One white paper report titled "The Injury Machine" noted that in 2021 Amazon was responsible for 49 percent of all industrial injuries that year.
Last year, a warehouse in Staten Island voted to become Amazon's first unionized workplace. As the company fought that move, here was a fairly typical opinion at the time:
“Amazon will delay,” said David Rosenfeld, a labor lawyer at Weinberg, Roger and Rosenfeld, and a lecturer at the University California at Berkeley School of Law. “They’re not going to walk in and do the right thing because that will encourage organizing everywhere else. They’ll do everything they can to avoid a contract, and it will be a big, long, nasty fight.”
(After a year-long fight, the National Labor Relations Board ruled that Amazon must begin collective bargaining with the union in January.)
So that's one of the parties who will be sitting across the table from the Writers Guild. There are a couple ways you can view that history and how it might drive the company's mindset. You can say they'll come to the table thinking, sure, that's how we run our warehouses, but writers, those are people we show some respect!
Or, smarting from the temerity of these fulfillment center gadflies, they could look across the table at a bunch of "high-living" Hollywood writers complaining about their work-standards and say, the foot must come down somewhere and if not here, when!
The twist, of course, is that Hollywood writers aren’t minimum-wage blue collar workers. And Amazon’s video efforts, not broken down in any P&L on its earnings reports, is so minuscule that it seems doubtful the company is trying to grind its division into a big revenue driver (or even profitability).
But, Amazon CEO Andy Jassy certainly has ramped up parts of the company’s entertainment universe, closing on the $8.45 billion acquisition of MGM. "I think it’s still pretty early days for us in entertainment," he said last year on CNBC(pre-stock market slide and layoff announcements, mind you). "We’ve invested a lot of money there and a lot of resources there, and I think you should expect we will continue to do so. We are very optimistic about what’s possible."
Also, does Jeff Bezos, executive chairman of Amazon, look like a man who doesn’t care what Hollywood thinks of him?
Given Amazon's history, I leave it to you to decide which is more likely to be their opening mindset.
APPLE
Apple meanwhile, is of course the company that was found to have knowingly used child labor in its Taiwanese plants— the signature scandal of the globalization era.
As recently as six weeks ago, Apple was cited by the NLRB for heavy-handed efforts to curtail employee discussion of workplace conditions, in an attempt to stymie labor organizing.
However, while Amazon has been relatively blasé about its public image over these things, Apple, an aspirational brand whose entire proposition is based on a quasi-utopian uplift, is much more sensitive about its public image.
And, like Bezos, CEO Tim Cook sure not immune to Hollywood’s red carpet.
NETFLIX
As for the final of the Streaming Age's Three Caballeros, Netflix doesn't have the sort of vast industrial production facilities of Apple or Amazon, the service's entire ethos could be summed up as "More. Faster" — the mindset which led to the creation of the hated mini-rooms.
Further, if there's one signature attribute on which The Service prides itself, it's its brutal HR philosophy; a topic so intrinsic to Netflix's self-identity, it was the topic of Reed Hastings' memoir.
Throughout its brief history, Netflix has responded to Hollywood's grumbles about the destructive influence of its business models with sneers and smirks — knowing, correctly, that whatever its collective gripes, there were few in the industry who individually wouldn't jump at an eye-popping check when dangled their way.
Given this perspective, Netflix and the other two might still be in disbelief that the Guild won't leap at any pittance dangled before them. After all, their experience has shown that in the end, Hollywood will take the check, no matter what strings are attached. Why would they think it will be any different now? Just because of some kvetches about mini-rooms?
There is, some have noticed, shall we say a sense of pride about having proven the entire industry wrong which leads to a certain intellectual inflexibility on topics like, say, theatrical releases to name one.
Yet still, like his tech CEO compatriots, Ted Sarandos is far from insusceptible to the glossy spoils of working in this industry — and having the industry love him back.
Some Scenarios…
I. When Does the Pain Tip the Balance
None of this lends itself to a spirit of conciliation when the Caballeros sit across the table with the WGA negotiators who come with the grievance that what these companies hath wrought has taken a wrecking ball through the industry’s core professions. If there's any spirit of "Oh sorry, we screwed that part up" on the part of the Caballeros, it's not something their leadership has expressed, lately or ever.
So if there isn't much hope that the streamers are going to show up at the negotiating table with a PowerPoint full of concessions, sleeves rolled up ready to figure this all out, then we move on to… what impact would a walkout have on them? When might the pain be great enough to drive them to rethink a hardline?
To answer that let's look first of all at that thing that moves the modern CEO above all else: the stock price.
While the legacy studios, already not exactly Wall Street darlings, are likely to take a hit quick in the event of the stoppage, things aren't quite so dire for the Caballeros. For Apple and Amazon, of course, the studios are such a tiny part of their businesses that work stoppages here aren't going to make so much as a smudge on their bottom line.
For Netflix, meanwhile, there is plenty of reason to be sanguine about where a strike leads. The Service of course, not only sits in the lead in the Streaming Wars, but in a commanding lead. The C-suite can probably rightly believe that theirs will be the last service most households cancel. A shutdown for all freezes that lead into place, as the disintegration will start at the bottom — hitting the fledgling services without as vast a collection first, should people start canceling.
Netflix also at any given moment has miles and miles of shows and films lined up on the runway or in post, waiting their turn. They could space out what they've already got a bit more, and the public would hardly notice (they might even welcome it) and they could keep freshening The Service for considerable time.
What's more, so much — or all — of Netflix's growth these days is fueled by its international productions, where much of its capacity lies and which could likely keep humming while other services wither on the vine.
And like all the streamers, they probably too allow themselves fantasies that drawn-out enough, a strike might actually break the Guild, to be followed by the disintegration of the Hollywood's other unions. And then you could really see the tech model in action here...
So there's not exactly a lot of notches to hang much hope on, at least initially.
II. What if the Studios Go Their Own Way?
Which brings us to the second big question here: When might the legacy studios break with the streamers and make their own agreements with the Guild?
It's one thing to war game scenarios where Netflix kills off the unions and runs its competitors out of business, but in fact, the legacy studios aren't going to just go bankrupt quietly. In particular, they aren't going to go out of business just to stand shoulder to shoulder with their good buddy Ted.
Initially however, that won’t necessarily be the case. A brief strike offers some real benefits to the studios — in particular their ability to force majeure their way out of vast contracts, deal and employees. The buzz out there already is that the lists have been made, like Madame Defarge's quilt, and the knives will fall very, very quickly when the shutdown happens. So the legacy studios might very well be thinking, if the streamers want to force a strike, we'll happily ride along with that for the opening round at least.
On week two, it's another matter. When the pain starts to be felt and they start to look at their own pipelines still choking from Covid-times, it starts to look scarier. As has been noted, given what's come over the past few years, this is not a great time for a strike, not for the employees and not for the employers either.
Unless the studios have really turned a card over in their heads and want to make a bid to break the unions once and for all (doubtful), it's hard to see that they will put up with this for very long. And if this makes new shows more expensive, forces a discipline of fewer shows…. well that's the world they knew for their entire history, and a world that favored them above the Netflix drunken sailor business model.
And there, potentially, the tide could turn. Obviously, Amazon and Apple don't have to make a show ever again if they don't want to, but they came here for their reasons (whatever those may be) and they show no signs of looking for an escape hatch (yet).
So if the legacy studios break and make a deal, are the Caballeros really going to hang tough on their own? Once the legacy studios sign, dreams of breaking the Guild would go up in smoke. Netflix may make a lot of its shows abroad, but ramping up above its present level, which is already straining international capacity, would be difficult.
III. Apple’s Pristine Image
Worse still, as mentioned, Apple's business model requires a giant halo staying intact around its whole enterprise. A very public fight against the creative community is not going to be good for that (imagine a picket line outside the modernist building in Culver City). While they've faced down labor in the past, this battle is going to be way, waaaay higher profile than any labor action they've dealt with before. If the studios make a separate peace, is Apple really going to go against the side of the angels so they can stand firm with… Netflix and Amazon? When the entire proposition of their Hollywood adventure has been about a kinship between the Apple brand and entertainment luminaries? If the DGA follows, are they going to stare down Steven Spielberg?
And if Apple goes, can Amazon and Netflix really persist as pariahs of the industry? Not just the targets of grumbles but actual boycotted pariahs? Hardened minds can turn on a dime when faced with something like that.
There you have it then. Given the current mindset, it's hard to see what holds back a walkout. But given the differing priorities, it's hard to see the walkout last an apocalyptic amount of time.
Of course, any amount of time will be apocalyptic for all those caught in the great force majeure culling. And once the walkout happens, war can take on a life of its own.
IV. Contagion Danger
On the flipside, however, Amazon and Apple face labor foment across their empires. Entertainment might be a tiny, glamorous little side project in the scheme of things, but making major concessions to a union in one corner has the potential to spread to other workers across the company — perhaps emboldening them even; a dangerous precedent for companies that have very much kept their growing labor tumult to a low roar.
But it doesn’t even require going to far-flung fulfillment centers to see where this precedent could spread. Coming on the heels of the writers’ contract will be the directors’ contract, the actors’ agreement and then next year, the IATSE agreement comes up again. Last time, the negotiation won some stopgap concessions but kicked the major questions down the road. The agreement just barely was accepted by the membership (with a startlingly low 56 percent of the vote). If the WGA negotiation results in anything resembling a "fundamental rethinking" of basic conditions, will the IA workers settle for stopgaps once again?
The lords of the tech world have clearly fallen for life in Hollywood. You don’t see Tim Cook posing for selfies on the red carpet with assembly plant workers. And while the needs of our creative professions are unique and don’t precisely translate to the demands of delivery people, both sides are united by a desire to rebuild some basic livable working standards and compensation in the new world the tech giants have created.
If the giants admit they understand this in the case of their fancy new friends, the Hollywood writers, are they going to be able to explain that this doesn’t apply to people who stamp labels on boxes all day?
And if the writers achieve success here, as they ask others in the industry to stand with them for fair wages, will they see it as their mission to send ripples across the pond of the modern economy? Or will they just give thanks that they are part of a very special group of very special people, that share little with their fellow tech giant worker bees around the globe?