TV’s Streaming Model Is Broken. It’s Also Not Going Away.

For Hollywood, figuring that out will be a horror show.

This Vulture article is the best I’ve read about the mess the streaming services have created for Hollywood writers and a major reason why the WGA is on strike. Some key excerpts.

By now, the grievances of the Writers Guild are well known, especially if you live near a picket line. Its members are upset that residuals are declining, that writing staffs are shrinking, that studios may replace them with ChatGPT, and that while streamers cry poverty, they’re paying their top executives nine figures. Many of these concerns are driven by a sense that the past decade was an elaborate bait and switch.

Early on, the streaming age seemed to herald exciting possibilities for writers. As the number of series ballooned, so did the number of writing jobs, allowing more people than ever, from a wider range of backgrounds and experiences, to partake in the great American fantasy of making TV. As other creative industries disintegrated, Hollywood promised not just an escape hatch but a ladder to career advancement, as former nobodies like Severance creator Dan Erickson saw their pilot scripts pulled from slush piles and given full-season orders. Novelists and playwrights descended on L.A., and there were so many writers’ rooms to fill that a few shows even hired (God help them) journalists.

The development surge was also great for established writers — at least at first, as the new economics of streaming made it easier than ever to cash in fast. Under the old TV model, if a show was a success, its creator stood to get rich on the back-end profits. With all of linear TV’s revenue streams combined (ads plus syndication plus overseas rights), a studio might bring in $3 for every $1 in costs on a hit. The problem for writers was that most shows flopped, so there was no back end to get a piece of. Streamers offered something different. Their model, called “cost plus,” might pay $1.30 to $1.50 up front, making every show a winner — just not a very big one.

To make up for the lost back end, streamers floated performance-based incentives. [Michael] Schur describes a scenario in which a platform might promise a showrunner a $100,000 bonus for season one, $250,000 for season two, $500,000 for season three, and $1.7 million for season four. “So you’re like, Holy shit. This is great!” he says. There was a catch. Many seemingly successful series began to vanish after just a couple of seasons. “What no one saw coming was they’d just kill the show before they ever had to pay that money out,” Schur says. “They kind of tricked everybody. Now if you get to 20 episodes, it’s a miracle.”

“In the disorganization and the chaos of the free-for-all,” says Julie Plec, the creator of The Vampire Diaries, “the foundational pieces of the business that made it work for everyone disappeared. We thought we were paying attention, and yet it still happened because nobody really knew anything about how any of this was working. We just all as a group sat there and watched all of the things that we had worked so hard to achieve — we watched them get taken away right from under our noses.”

Streaming bosses (and even some agents) think such complaints are overhyped. The cost-plus model offers creators pretty good, low-risk income. But on the whole, creative types aren’t looking for predictability. “Most writers are gamblers,” says someone who has created megahits in both linear and streaming TV, “and are willing to bet on their own talents. They would be much happier getting a bigger payday with big success and a more modest payday if their show didn’t work. But now everybody’s basically playing a baseball game where people can only hit singles. The ball over the fence is still only a single.”

I’m not an economist, so I won’t pretend to be an expert about such matters. That said, I think I understand this much.

The streaming services led by Netflix adopted a business strategy based on growth as their chief selling point to Wall Street. As long as they continued to increase subscribers, the valuations of the companies and their ability to borrow money to finance project development would continue unabated.

Then about a year ago, Netflix subscriptions flattened. That impacted not only Netflix, but all the other streaming services as well as the legacy studios which had launched their own streaming networks (i.e., Disney, Warner Bros.).

Now everyone is in a kind of gray area where they are moving toward the more conventional business strategy based upon profits. That’s why Netflix has created an ad-based platform for subscribers. It’s also why they are laying off employees, scaling back development slates, cancelling programs, etc.

Meanwhile, writers are caught in the middle of bad business decisions by their corporate overlords.

So here we are … seeking nominal increases in wages when the folks on the other side of the desk are claiming poverty …

Delivering that news via bullhorns from the top deck of their personal yachts.

For the rest of the article written by Josef Adalian and Lane Brown for Vulture, go here.

For the latest updates on the strike and news resources as aggregated on Go Into The Story, go here.