AI: Hollywood Jostled by Tech again

...negotiating Scarcity vs Abundance

It’s time we talked about the historic strikes that have hit Hollywood and thus the world. On the surface it has very little to do with AI, but it really does in the big picture.

Especially since Tech and AI over the long run accelerate the trend from Scarcity to Abundance, in terms of digital creation and distribution (aka Streaming) of any content that ultimately attracts human attention.  For Hollywood for now, it’s about carving smaller pies while waiting for bigger, newer pies.

First, a recap of what’s happened. As the New York Times story explains:

“On Friday, roughly 160,000 unionized actors went on strike for the first time in 43 years, saying they were fed up with exorbitant pay for entertainment moguls and worried about not receiving a fair share of the spoils of a streaming-dominated future. They joined 11,500 already striking screenwriters, who walked out in May over similar concerns, including the threat of artificial intelligence. Actors and writers had not been on strike at the same time since 1960.”

“The industry that we once knew — when I did ‘The Nanny’ — everybody was part of the gravy train,” Fran Drescher, the former sitcom star and the president of the actors’ union, said while announcing the walkout. “Now it’s a walled-in vacuum.”

Notably, the last time the actors went on a similar strike in 1960, the head of the actor’s union was another famous TV actor Ronald Reagan.

The historical rhymes with technology this time are also striking. As the unimitable Ben Thompson of Stratechtery points out in his “Hollywood on Strike” (worth reading in full):

“The reason to start with 1960 is that that was the last time actors and writers were on strike at the same time; the primary driver of that unrest was the rise of television.”

“As for the last actors strike, in 1980? That was about the rise of home video. This leads to the first takeaway: the most important driver of unrest between studios and talent has always been technological paradigm shifts, and this time is no different.”

“In this case it is the rise of streaming that strikes me as more consequential than AI, but to first dispatch with the latter, it seems to me that writers are much more threatened by AI; it’s much more plausible today to imagine using an LLM AI to generating a B-movie script or filler television than it is to imagine AI replicating actors (particularly since actors licensing their likeness may in fact turn out to be very lucrative).”

The bigger issues are more prosaic, outlined by the NYTimes, especially that 

“Hollywood’s two traditional businesses, the box office and television channels, are both badly broken.”

They continue:

“Disney, NBCUniversal, Paramount Global and WarnerBros. Discovery have relied for decades on television channels for fat profit growth. The end of that era has resulted in stock-price malaise. Disney shares have fallen 55 percent from their peak in March 2021. Paramount Global, which owns channels like MTV and CBS, has experienced an 83 percent decline over the same period.”

“Robert A. Iger, Disney’s chief executive, put the sale of the company’s “noncore” channels, including ABC and FX, on the table. He called the decline in traditional television “a reality we have to come to grips with.”

“And then there is streaming. For a time, Wall Street was mesmerized by the subscriber-siphoning potential of services like Disney+, Max, Hulu, Paramount+ and Peacock, so the big Hollywood companies poured money into building online viewing platforms.”

“Netflix was conquering the world. Amazon had arrived in Hollywood determined to make inroads, as had the ultra-deep-pocketed Apple. If the older entertainment companies wanted to remain competitive — not to mention relevant — there was only one direction to run.” 

The perplexing thing for Hollywood executives is that trillion dollar tech companies barely know they’re in the entertainment business, yet their sneezes cause tornadoes across the industry. As Hollywood’s iconic Barry Diller puts it:

“You now have, really in control, tech companies who haven’t a care or clue, so to speak, about the entertainment business — it’s not a pejorative, it’s just the reality,” Barry Diller, the media veteran, said by phone this past week, referring to Amazon and Apple.”

“For each of these companies,” he added, “their minor business, not their major business, is entertainment. And yet, because of their size and influence, their minor interests are paramount in making any decisions about the future.”

As the NYTimes puts it at the end:

“Eventually, contracts with the Writers Guild of America and SAG-AFTRA, as the actors’ union is known, will be hammered out.

“The deeper business challenges will remain.”

They are right of course. However, the bigger challenges are even further exacerbated by much broader trends at play driven by previous and current Tech waves. 

We are still in a world where, as Ben Thompson reminds us:

“Every person on earth has only 168 hours in a week, during which time they are presumably sleeping and working. Those few remaining hours can now be filled by YouTube, or gaming, or podcasts. Every single minute spent doing something other than consuming Hollywood content is a minute lost forever.”

The world has changed a lot since 1960, especially in terms of TV and us. This Hedgehog review piece outlines the issues well:

“During the last twenty years, social media has altered the way we interact with popular culture. An explosion of user-generated content—attributable to cheaply produced electronics and platforms like Facebook and Twitter—widened the focus of popular discourse, shifting attention from our TVs to our proliferating mobile screens. But neither Facebook nor Twitter has kept pace with the sudden rise of the short-video app TikTok.”

“With 1.5 billion active users, and 50 percent of its user base under thirty, TikTok has quickly become one of the world’s most popular social media platforms.”

“But is TikTok really social media? Not according to Blake Chandlee, the company’s head of Global Business Solutions, who has called TikTok “an entertainment platform,” pointing to the “massive” difference between the company’s approach and that of Facebook.”

“By design, TikTok encourages different behaviors from those prompted by other social networks. Whereas 70 percent of Instagram users regularly post to the platform, barely a third of TikTokkers do.”

“They say they check Facebook, and they check Instagram and they check Twitter,” said Khartoon Weiss, another TikTok executive. “But they don’t check TikTok. They tell us they watch TikTok.” Like television, TikTok is something you watch. Its primary purpose is entertainment.”

“Yet half a billion is far from nothing. Millions post to the platform every day, and since the app offers no option to share selectively, posts are instantly available to everyone.”

“Call it the commoditization of broadcasting. Where networks once sought captive audiences in the tens of millions, TikTokkers seek out hashtagged niches from a pool of billions.”

And here is where AI comes in play, and as I’ve outlined before, it’s just the beginning:

“The app’s “For You” page, which auto-plays content tailored to your preferences, is little more than algorithmically assisted channel surfing.”

Ironically, it’s a counter-intuitive development. Continuing from the Hedgehog:

“In the Internet’s early years, the Web’s advocates believed that it would save us from mass media, of which television was the prime example. Instead, the Internet (and TikTok specifically) brought the language of television—its logic, its drama, its endless distraction—into our everyday lives.”

Here is their broader societal takeaway that hits home for me in particular (Bolding mine below):

“Rather, television is a manifestation of what French philosopher Guy Debord called the “society of the spectacle.” Six years after Minow’s polemic, Debord argued that mass media had become the driving force in modern life: “The spectacle is not a collection of images, but a social relation among people, mediated by images.” Understood in this way, television is not legacy media, but entertainment as ideology—a way of understanding the world through televised means.”

“If the first age of television was the TV set’s emergence in the 1950s, and the second and third were the explosion of cable in the 1980s and the arrival of big-budget, cinematic programming in the 2000s, ours is a fourth age of television, in which televised performance is no longer something to be watched but something to be lived.”

Again, from Ben Thompson of Stratechtery, a lesson from earlier Tech industry waves:

“Scarcity in terms of distribution is now gone; the only scarce resource on the Internet is consumer time and attention, and commanding that is far more difficult and risky. Look no further than the deteriorating financial condition of most of Hollywood: not only are the studios competing with Netflix and Amazon and Apple, but also with things like YouTube and social media.”

And now TikTok of course:

“Just as newspapers once thought the Internet was a boon because it increased their addressable market, only to find out that it also drastically increased competition for reader’s attention.”

“That reality is going to come to the fore if this strike drags on: if people don’t have new movies or shows to watch they will find far more options to fill their time than existed in 1960; the risk to Hollywood is that some of those alternatives become a permanent feature of people’s media diets.”

“The broader issue is that the video industry finally seems to be facing what happened to the print and music industry before them: the Internet comes bearing gifts like infinite capacity and free distribution, but those gifts are a poisoned chalice for industries predicated on scarcity.”

In a world especially where tens of millions of younger generations now aspire to be online “Creators” as they once aspired to be doctors or astronauts, the abundance of competition becomes far clearer in a world of eight billion creative souls. 

“When anyone could publish text, most text-based businesses went from massive profitability to terminal decline; when anyone could distribute music the music industry could only be saved by tech companies like Spotify helping them sell convenience in place of plastic discs.”

“For the video industry the first step to survival must be to retreat to what they are good at — producing content that isn’t available anywhere else — and getting away from what they are not, i.e. running undifferentiated streaming services with massive direct costs and even larger opportunity ones.”

“Talent, meanwhile, has to realize that they and the studios are not divided by this new paradigm, but jointly threatened: the Internet is bad news for content producers with outsized costs, and long-term sustainability will be that much harder to achieve if the focus is on increasing them.”

Words to digest and reprogram the scarcity valuing media industry. Tech and AI will continue to flood us with abundant possibilities at an exponential pace. Pass the popcorn. Stay tuned.