We call this publication Faultline, because there is a fault in the seam of major entertainment and video based markets, as they switch to digital distribution mechanisms, and nowhere is this more evident than in the changing face of film and TV content. The idea is that the winners in an existing analog market are unlikely to be the winners in future digital market mechanisms.
Most people would disagree with us that this applies to content. Surely good content will find a way of being viewed or heard? regardless of its route to market? We don’t think so. Bad content well distributed, makes money.
Let’s take a look at the now unsuccessful strike motion of the Screen Actors Guild, now in tatters given that this week it fired the one man that was pushing for strike action ‘ Doug Allen, the guild’s chief negotiator and national executive director. He will get a full pay out of three years of his contract left to run, something to help him sit out this recession.
Regardless of Allen’s own motives, he was unable to bring the issue of a strike to a vote. The senior members of the Screen Actors Guild are so powerful that they managed to filibuster the vote, a form of obstruction in any decision-making body where attempts are made to infinitely extend debate in order to completely prevent a vote on a proposal taking place. Only in the highly undemocratic USA, which praises democracy, could such a word be created. Somehow the actors managed to pass a vote of the board sacking Allen, in a narrow vote understood to be 52% to 48%, without ever asking grass roots members if they wanted to strike or if they wanted to vote on sacking Allen.
On the surface of this issue, this is a defeat for the little guy, the actor which cannot yet dictate his or her contract terms and which will have to put up with the ‘negotiated’ settlement which is now inevitable and probably only days, or at worst a few weeks, away.
Throughout the last 20 years the studios have told writers, directors and actors ‘ ‘you can’t have any of the income from the new experimental DVD format’ ‘ a stance which lasted well into the stage where DVDs sales were the largest revenue format for film. The studios are now saying much the same about online and mobile versions of content. The writers by striking have won concessions while the actors, by not striking, perhaps have lost them.
This may be about whether or not actors get paid on content appearing legally on sites like Hulu and YouTube, which today is a tiny amount. But given that the industry is in a state of flux, by the time this negotiation comes up again, it could potentially be the main revenue earner for either films or TV series or both.
Right now there is a much greater percentage of US people who watch online video compared to other countries, but given that the country is behind on broadband penetration, it is countries which have bigger online populations that will eventually dominate online video.
Under the studios current offer, represented by the Alliance of Motion Picture and Television Producers, virtually nothing will be paid to actors for the next ten years for online or mobile content, although now that a strike is not imminent it may decide to be generous here ‘ that would be a first.
Don’t get us wrong, we’re not strike happy ourselves and we have always taken the position that if a strike is discussed, it’s because of the Faultline effect ‘ the industry will get its revenues from new sources and that means change ‘ not just change to contractual terms ‘ but to the winners and losers.
The film industry and the TV industry in the US have been ambitious to be global and in some sense have both achieved that. It has managed this by building distribution mechanisms into global cinema, and to some extent the US invented the cinema industry, which is still rolling out infrastructure in places like China, India and Asia Pacific. The same for pay TV and digital TV, be it satellite or terrestrial or cable ‘ these are all in a huge state of flux in these territories. And how they fill these channels in the long term will create new titans in film and TV production ‘ if China only imports US TV and US films at first in order to create a digital video distribution industry, it will initially control that industry.
But China in particular, and India perhaps less clearly, have never allowed their industries to be totally dominated by outsiders. They are today more aware of the importance of their audiences than they have ever been and both have nascent films industries and the pay TV giants emerging in these countries are either government controlled or at least locally owned.
Even the US efforts on piracy are likely to backfire, as China, India and places like Russia will only be happy protecting the DVD distribution industries when local companies have as much to lose as Hollywood, in turn creating rival output that can be exported. A strong and well enforced piracy law strengthens Bollywood and its revenues as much as Hollywood.
So like the mobile handset wars, the battle for control of the global film industry will not be won in Hollywood, but in these emerging nations of India, China and the Asia Pacific and of course in Europe, where more content is currently consumed, which is still dominated by US imports. If that changes, even a fraction, due to emerging digital business models, and a liking for non-US content, then the balance of power can shift, day by day, year by year away from Hollywood. And of course that means away from Hollywood actors and script writers as well, regardless of whether they went on strike or not.
All there is to do is tidy up this little US ruckus with a new agreement for the one that expired last June, and we can write the final footnotes to a dispute which will leave most minor actors without online revenues. And leave Hollywood to fight its real battle, to retain global control of an industry in change.
Allen will be replaced by former guild general counsel David White as interim national executive director, the group said and veteran guild staff member John McGuire will lead on continued negotiations.