Hollywood is in Decline – Union Strikes Partly to Blame, Says Scott Galloway

Opinion

by Nino LeitnerJuly 11^th, 2024

In a recent interview with NYU marketing professor and podcaster Scott Galloway, an outsider to the film industry shared some provocative insights about the “vanity industry” of being a filmmaker in Hollywood, an “industry in structural decline,” and why he thinks the Writers and Actors Unions did a terrible job with their recent strikes, achieving the opposite of what they intended.

I’ve been listening to Scott Galloway’s insights on his podcasts Pivot and The Prof G Show for a while, and he is known to deliver thought-provoking sound bites about the economy, but usually not about the film industry. That was until I listened to the latest episode of “The Town” podcast by Matthew Belloni, in which he gave a scathing assessment of the situation Hollywood is in and how much, in his view, the unions did their members and the industry as a whole a disservice with their recent strikes. And I think he has a point.

Hollywood’s Big Big Tech Problem – Scott Galloway on “The Town with Matthew Belloni”

The entire episode is worth a listen:

Why the strikes gave the studios the perfect excuse to cut costs

Scott Galloway was critical of the writers’ and actors’ strikes, saying they lacked leverage and allowed the industry to reshape itself during the strike. He argues the strikes resulted in a transfer of wealth from union members and smaller streamers to Netflix. Galloway believes the gains made by unions (e.g., 5% wage increase, AI protections) were insignificant compared to the losses from being out of work for months. He suggests there are now fewer writers making money post-strike, with overall buying and orders down, and that the strikes gave the streamers the perfect excuse to cut excess costs and projects as they were already in the middle of an unsustainable “streaming bubble” in cutthroat competition with each other.

At a time when the studio spending was out of control because of the fierce competition between the streaming platforms, which of course benefitted the authors and the creative community through a lot of work, the strikes “forced a multilateral pause in spending” which allows them to reevaluate their spending and figure out who they really need and don’t need.

Scott Galloway on “The Town with Matthew Belloni”

What should have happened: unions and studios joining forces to sue AI companies

Galloway argues the unions should have partnered with studios to fight against tech companies and AI rather than fighting each other. He advocates for studios to sue AI companies for crawling their content without compensation and criticizes the entertainment industry for not being more aggressive in protecting their interests against tech companies and AI.

After all, in other areas of media, such as newspaper publishing, publishers like the New York Times are suing OpenAI for “stealing” their content to train their large-language models (LLMs), and major record companies are suing AI music startups Udio and Suno for “mass infringement” of copyright (we reviewed these AI music services recently). One has to agree with Galloway and wonder why the film industry is still running an inconsistent appeasement policy with AI companies rather than squeezing them in court.

If the union had any sense, it would be spending all of its money to hire very aggressive law firms and get every single studio on their side. They should be partnering together to try and figure out a way to sue the shit out of all LLM’s and AI companies such as if they’re crawling their data. They participate in those revenues. Instead, they’re fighting each other and all they’re doing is making Netflix wealthier and letting the AI and LLM’s continue to crawl their data. 

Scott Galloway on “The Town with Matthew Belloni”

Paramount Pictures sold to son of tech billionaire

The recent announcement of Paramount Pictures being taken over by Skydance, David Ellison’s production company, might only underline the fact that Hollywood is selling out to big tech instead of fighting it in court – after all, David Ellison is the son of billionaire Larry Ellison, founder of Oracle, a tech giant who’s heavily involved with generative AI data centers. (This takeover was announced weeks after the recording of Galloway’s interview with Belloni, which is why it’s not a topic in that podcast.)

Hollywood is “a vanity industry in structural decline.”

Being an economist and looking at the numbers, Scott Galloway gives a scathing assessment of the film industry.

He suggests the streaming market is consolidating and predicts further industry reshaping. Galloway advises young people to be cautious about entering the entertainment industry, describing it as a “vanity industry” with structural decline. He believes the future of entertainment is shifting towards smaller screens (e.g., TikTok, YouTube) and away from traditional Hollywood productions.

As an example, he quotes that 87% of people in SAG AFTRA didn’t have health insurance last year because they didn’t make more than $25,000, while only the top 10% can make a decent living, with the top 1% taking in most of the money.

Are we filmmakers just chasing an unrealistic dream?

It’s interesting and sobering to hear the thoughts of an outsider of the filmmaking industry giving an assessment of the state of things. Are too many people chasing the Hollywood dream when it’s not something that has a big future in our world? Is Hollywood in decline? Sad to think about that and admit it, but I am curious about your takes on this. Sound off in the comments below, I would love to get a discussion about this going.