The drama in Hollywood is heating up just as there appeared to be a breakthrough for the creative industry. On Sunday, the Directors Guild of America inked a tentative three-year contract with major studios and streamers, though the Writers Guild of America and Screen Actors Guild are still holding out. In fact, the former has been on strike for six weeks, while the latter just authorized a potential strike if an agreement cannot be reached by June 30.
What are the fights about? At issue are wages and benefits, as well as royalty payments like global streaming residuals. Artificial intelligence is also at play, with the unions fighting for protections so that AI won’t replace its members. Writers additionally say that tech companies like Netflix (NFLX) are hiring for shorter stints and lower wages, which is hindering the creative process. It comes as many studios absorb heavy losses associated with streaming, making them think twice about their bottom line during the negotiations.
A walkout by the Writers Guild of America has already shut down the final season of Netflix’s Stranger Things, an HBO (WBD) prequel of Game of Thrones, and paused production on Disney’s (DIS) Thunderbolts and Blade. A strike by actors would trigger a broader shutdown across Hollywood, while ramping up pressure on companies that need to support their streaming services and TV programming schedules. Other studios involved include Amazon (AMZN), Apple (AAPL), NBCUniversal (CMCSA), Paramount (PARA) and Sony (SONY) – under the umbrella of the Alliance of Motion Picture and Television Producers.
What’s next? “For now, the studios/streamers aren’t in a rush to be flexible because the strike could eventually allow them to shed unprofitable long-term deals,” writes SA analyst The Entertainment Oracle, “but that’s also a dangerous long-term game.” If prolonged, studios could turn to reality or unscripted shows, and internationally produced content, but the financial impacts will eventually catch up. Moody’s has warned that an extended strike could hurt the credit ratings of “weakly positioned” media companies, while Paramount CEO Bob Bakish has said that the situation will “ultimately depend on the duration of the strike.” (16 comments)
Apple (AAPL) unveiled its mixed-reality headset at its annual Worldwide Developers Conference on Monday, ushering in a new era of what CEO Tim Cook called “spatial computing.” Unlike joystick-powered rival devices like the Meta Quest (META), Apple’s headset relies on hand tracking, with the user gesturing in midair to control the interface. However, the new super-premium device was priced at $3,499, and the overwhelming majority of WSB subscribers feel that the product is too niche for the market, with the stock closing down 0.8% after hitting a new all-time high. As previously mentioned, SA analyst Ash Anderson said WWDC would likely be a “sell the news” event for Apple following its biggest product launch in nearly a decade. (608 comments)
The SEC has sued cryptocurrency exchange Binance and its CEO Changpeng Zhao for allegedly violating U.S. securities regulations. The news pushed cryptocurrency prices lower, with Bitcoin (BTC-USD) down 3.8% at $25.78K today and ether (ETH-USD) 2.7% lower at $1.82K. Thirteen charges were filed against Binance and CZ, as he is known, including deceiving investors about the sufficiency of its systems to detect and control manipulative trading. The SEC also accused the platform of taking insufficient steps to prohibit U.S. investors from accessing its unregulated exchange. Binance is disputing the allegations, saying it is “disappointed” with the SEC suit and “will vigorously defend” its business. (45 comments)
New plans from General Motors (GM) will see it invest more than $1B in two of its manufacturing sites in Flint Michigan. The investment will bolster the Detroit automaker’s U.S. manufacturing operations, which include more than 50 assembly, stamping, propulsion and component plants and parts distribution centers nationwide. It will also highlight the company’s commitment to continue providing customers a strong portfolio of ICE vehicles for years to come. The rapidly changing automotive market was recently discussed by SA analyst Manuel Paul Dipold, who takes a deeper dive into GM’s future and market share. (16 comments)