As you have likely noticed from news reports and social media, or perhaps because your favorite TV show is on hiatus, members of SAG-AFTRA, the prominent union for performers and media professionals in Hollywood, have joined the Writers Guild of America (WGA) in a historic joint strike.
This marks the first time since 1960 that both unions have initiated a collective walkout against the studios. The strike is a result of both unions not being able to reach an agreement with the AMPTP over their working conditions, compensation structure, and threats to their jobs including AI.
How will the Hollywood strike affect streaming platforms and advertisers in the short and long term? We asked our experts at Tinuiti to give us their insights.
Immediate Impact of the Strikes on TV and Streaming Projects
As a result of the strike, numerous Hollywood productions are currently on hold, directly impacting both traditional linear TV and streaming services. Furthermore, other channels such as podcasting are experiencing downstream effects from the situation in the form of increased demand on audio inventory.
Unscripted content, including news, sports, reality, and documentary shows that were already in production, as well as projects involving casts and crews not affiliated with these unions, are proceeding as scheduled. However, movies and original television content in the early stages of production, along with shows requiring ongoing writing (e.g., late-night comedy shows), are currently on pause.
As it relates to advertiser demand, Upfront deals faced a slow start as brands and agencies dealt with uncertainties regarding programming availability. However, as networks have finalized their Q4 schedules and contingency plans spanning into 2024, the Upfront marketplace is now gaining momentum and negotiations are moving more swiftly.
The impact on viewership has been less pronounced; streaming demand is largely unaffected at this point, and audiences may be even more apt to lean into their favorite services to catch up on the backlog of shows they’ve been wanting to watch.
Viewership isn’t the only element where streaming has an edge; Netflix has been vocal about their strong positioning due to their domestic and international content pipelines, not to mention that their future plans set them up to handily recover the cost of any union settlement (among these being new sign up growth in the wake of password sharing crackdown).
What Are the Potential Future Implications of the Strike for TV Advertisers?
These are profound issues being discussed in Hollywood and we believe this has the potential to alter the television ecosystem yet again, but won’t necessarily slow it down. It’s reminiscent of what we saw early on in the pandemic when production screeched to a halt and networks had to pivot their content strategy…only this time, they have a playbook for doing so.
In general, linear TV will heavily rely on unscripted programming along with news and the juggernaut that is Q4 sports. Additionally, we expect a surge in streaming adoption since most platforms boast an extensive catalog of shows and vast content vaults that viewers can explore.
What if the Strike Continues?
The marketplace appears stable through the heart of Q4, but should the strike continue beyond October, video inventory will tighten up considerably in Sports and News as original scripted content begins to run dry.
Here are a few areas where change is the most noteworthy:
Media partners are restructuring their Upfront approach.
Some networks are pivoting to structure Upfront deals based on volume and share as opposed to a CPM-based rate of change, indicating that they may be willing to forego traditional CPM increases for advertisers who are willing to buy larger swaths of inventory. They are also touting the value of locking in audience guarantees now to ensure priority placement and audience delivery, so the remaining Scatter inventory is expected to be more scarce compared to previous years.
Programming allocations are already robust in reality and unscripted content as a whole, so efforts to keep audience deficiency units (ADUs) within the same vertical will largely be doable. Networks are open to cross-vertical shifts into content like news and sports if needed, which is a less conventional approach, though they haven’t seen much demand for this yet.
Should the strike continue into Q4, opportunistic firesales are less likely across existing content as inventory will be more heavily utilized for advertisers who are owed ADUs, if viewership does start to fall short.
The Impact extends into audio via Podcasting.
Podcasting is a non-video channel that has experienced a material change here; given its high volume of episodic entertainment content, the space is seeing an increase in demand from brands who are looking to shift budgets to other formats with similar genres to television.
Advice for Brands During the Hollywood Strikes
It’s a careful balance between ensuring brand’s marketing goals don’t lose steam while navigating around an important dialogue that it seems may endure for months to come. Ultimately, we’re seeing that there’s a large stockpile of content to keep audiences engaged while the unions take the time to advocate for what they need.
Here are six tips on how brands can prepare for what lies ahead:
1. Lock in Q4 news and sports early to avoid inflated pricing and limited availability.
2. Consider securing Q1 inventory shortly after Q4 starts, based on the strike’s duration. Act even more quickly for Super Bowl LVIII, as interest is exceptionally high (70%+ sold).
3. Test or increase investment in unaffected programming like news and reality to assess performance and be prepared to lean into these areas for clearance if needed.
4. Monitor for new programming and specials with shorter lead times, as opportunistic pricing may be available with last minute changes.
5. Plan and book popular podcasts with several months’ lead time, as they are experiencing increased demand crossover.
6. Continue or expand investment in streaming platforms with expected high viewership; expect faster growth in FAST (Free Ad-supported Streaming TV) platforms as broadcast viewers seek alternative options to avoid taking on subscription fees.