Four weeks ago, Sag-Aftra, the Hollywood actors’ union, commenced industrial action, joining forces with the Writers Guild of America, which started its strike action in early May. The focus of the strikes is on residuals – the payments that performers receive for repeat showings of films and TV shows – as well as calls to tighten regulations around the use of artificial intelligence to replicate actors’ likenesses. This joint action has severely disrupted the film and TV industries, bringing global production to a standstill and delaying the release of a number of high-profile movies – and this in turn is having a significant impact on advertisers. Although viewers are yet to feel the full effect of these strikes, the delay in production from both the writer and actor side will be evident from mid-September onwards. Regardless of whether an agreement is reached now, the lack of content produced will cascade into the coming months with an expected gap in new programming. The length of this gap will be determined by how long it takes for a settlement to be reached.
Impacting fall TV schedules
The lack of new premium and scripted programs will continue to impact fall TV schedules and programming. Network schedules will be heavily dependent on sports, reality content and reruns. This will inevitability lead to an overall decline in TV viewership performance and market deflation on TV ad prices, with the exception of NFL live games, for which demand will remain strong. Compounding the TV decline is the acceleration of cord-cutting; for the first time ever, Nielsen reported total linear TV viewership falling below 50%, with viewers and marketing spending shifting to connected TV. The beneficiaries are YouTube and free ad-supported streaming television (FAST) channels like Roku, Tubi and Pluto TV. The TV scatter market will see a huge upswing if and when the Hollywood strikes end and the networks finalize and confirm their fall and winter lineups.
The impact that the Hollywood strikes will have on programming schedules will have an effect on TV inflation; the shift in supply towards CTV and streaming will contribute to the deflation that we forecast for US TV in the Q2 update of our Media Inflation Report. This will however be mitigated to an extent by the fact that the global economic downturn is affecting demand.
The impending surge of streaming
The last writers’ strikes, in 2007 and 2008, were at a time when streaming services were much less prevalent and developed than they are today. This means that predicting how the platforms will be affected is a new area of concern. It is expected that for platforms such as Netflix, the strikes may have less of a negative effect; indeed, they may even benefit from a boost as reduced TV programming may catalyze the shift to the streaming platforms. Since Netflix produces shows so early in advance, it has a large stockpile of content that it can release throughout the striking period. They are also known for frequently producing content outside of the US, which will allow them to continue producing new shows – a luxury that other platforms may not have. With the growing success of Netflix’s new ad-supported subscription plan and the expectation that viewers will not be impacted due to its content practices, Netflix seems to be a safe option for ad dollars. There is, however, a question around volume. Will there be enough advertising space for advertisers looking to move away from linear TV given the lower number of ads on streaming platforms?
Is it time to explore other avenues?
The terms of the strike prevent actors and writers from engaging in promotional activities such as posting on social media platforms and appearing on podcasts. Media companies will likely look to content creators and influencers for support in promotion. While in recent years it hasn’t been uncommon for influencers to be involved in the likes of red-carpet events, this could lead to the rise in recognition that individuals in these roles have been longing for. Sag-Aftra has urged creators not to step up to this role, whether that be part of a paid deal or unsponsored content, and has stated that those who do will be banned from joining the union in the future. It opened its membership to influencers in 2021. Those who do not have aspirations to progress to Hollywood are likely to see an influx in opportunities, with some even suggesting that brands and creators should collaborate to produce new material to fill in programming gaps.
Another avenue in which advertisers are likely to direct their attention is online audio. Podcasts provide an opportunity to advertise to highly engaged audiences who might otherwise be difficult to reach. With TV viewers beginning to look elsewhere for fresh, regular content, podcast listening figures are expected to benefit in a similar way to streaming services from the strikes.
The strikes aren’t as bad as they first appear
However, there is hope for the TV industry, which is experiencing its second major upheaval in the last five years. There is a steady stream of movies on the horizon, for which production is already complete or has been taking place overseas. We will undoubtedly see successful movie launches over the coming months, as demonstrated by the Barbie and Oppenheimer opening weekend last month, which took place during the double strike period. What’s more, TV spend rebounded quickly after the pandemic, and it’s likely to be the same for the strikes.
As for advertisers, whilst this curveball will require some planning and reconsideration, that’s not necessarily a negative. Due to the uncertainty around programming and viewership, TV vendors will be eager to secure business, thereby giving advertisers the upper hand to demand agreements that suit them. The volatility in the TV market means that advertisers can explore other media avenues, such as influencers and podcasts, to a greater extent without the concern of loss that often accompanies deviating from a normally-strong media channel.