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Netflix + Amazon Expected To Boom As Writer’s Strike Looms

Streaming companies like Netflix and Amazon have made gains on the stock market as the impending possibility of a strike by the Writer’s Guild of America threatens to hit traditional TV networks where it hurts.

The WGA are seeking a new agreement with studios that sets pay rates for union members, contributions to a health plan and royalties paid on repeat showings.

They argue that while Hollywood’s profits have exploded in recent years with blockbuster franchises like Star Wars and Marvel films, the wages paid to writers have declined 23%.

Earlier this week, 96% of the 14,000-strong union voted to authorize a strike beginning May 2 if a new contract with Hollywood’s production studios is not reached. However, if this happens, it won’t just be film production affected but also TV series and video content produced for streaming services like Netflix and Amazon Prime.

In the event of a WGA strike, some of the biggest shows produced by major American networks like ABC, CBS and NBC will either be forced off the air temporarily or cancelled wholesale.

What’s more, the prolonged production pipeline that platforms like Netflix utilize mean that while they may well be affected by a strike, the disruptions to their overall strategy will likely be balanced out by the influx of frustrated customers unable to find the content they want on traditional TV networks.

Netflix’s chief of content, Ted Sarandos, confirmed as much in the company’s most-recent earnings call saying “look, we’re keeping an eye on it like everybody else and like everybody else our productions would be impacted if it happens,” he told analysts.

“We may be impacted a little bit less, because we’re not on such a rigid production schedule, where we’re not producing for the fall in the summer, we’re in year-round production. But some of our productions would be held up in the event of a strike, which our fingers are crossed that, that won’t happen.”

While there is still a week of time left for potential negotiations to avert the walk-off, analysts are already cautioning that the repercussions of the strike could far exceed that of the last WGA strike in 2007/2008.

“If networks are unable to air new seasons due to the strike, this could result in a much greater shift towards (over-the-top) platforms than would be the case otherwise,” wrote Barclays analysts Ross Sandler and Kannan Venkateshwar.

 

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