As readers of my blog are well aware I am very sympathetic to those who have argued that just pursuing future new media revenues is a potential mistake given the huge pools of money currently being earned by the studios. The biggest such pristine and untouched pool is DVD revenue – to the tune of $20 billion a year. That compares to approximately $200 mn a year from internet revenue. Even Merrill Lynch has told investors that the DVD 80/20 split is “admittedly unfair” to talent.
But what is the strategy to get a larger share of that 80/20 split?
The WGA not only went out on strike instead of waiting for S.A.G. but very quickly backed away from an attempt to put a dent in the DVD cash flow. Why? One can only assume that they were not willing to wait for S.A.G. because they saw the battle being led there against AFTRA as evidence that it would not be worth risking a delay when the WGA knew they had the internal commitment to strike sooner. But that very likely forced them to drop the attack on DVD revenues because once out on their own without S.A.G. they did not have the leverage to be successful on that issue.
In the short period of time remaining before the collective bargaining agreement expires, what can S.A.G. do to put a dent in DVD revenues? I believe there are important tactical moves that could be made but they will take a very high level of internal unity and commitment.
The key in bargaining is leverage and the willingness to exploit that leverage. Are DVD revenues the target? Then go after the point of sale – an actor led boycott of Wal Mart and Best Buy, for example. Leverage must be created by exploiting the vulnerabilities in the structure of the industry. Only a very long strike can really inflict pain on the production side – but there are other ways to hit the distribution side (like a boycott). This can work for new media, too – the AFL-CIO for example recently succeeded in a shareholder campaign on over paid executive compensation at Apple. Apple is a crucial player in digital distribution and they have a very carefully constructed public image that could easily be impacted.
I could go on….the unanswered question is what is the strategy that is being proposed that can lead to better results than the WGA. If there is one in the works – great, but frankly I just see little sign that there is a strategy to match the militant and tough talk that seems to come so easily to some. If there is no such strategy then S.A.G. and AFTRA are better off taking the deal offered by the producers in their recent discussions with S.A.G. Executive Director Doug Allen and President Alan Rosenberg (if the Deadline Hollywood reports are to be believed the AMPTP is ready to sign a variation of the WGA deal with the Guild right now).
Otherwise here is what will happen: very shortly the AMPTP will announce publicly its willingness to sign immediately a deal with the Guild and AFTRA that is identical or very close to the WGA/DGA deals. They know that the Membership First party that currently runs S.A.G. will want to reject that deal and they are hoping that happens because they are acting under the assumption that Membership First wants a strike but that the rest of the Guild does not. Since there is little evidence that the Membership First party has a strategy that will generate leverage for the Guild on DVD’s or new media, they will likely drag out negotiations even possibly leading a brief walkout. The studios will reschedule production to avoid major damage from a walkout and then dig in their heels even withdrawing their take it or leave it WGA level deal. This could lead to the Guild being forced back to work with a weaker deal or risk a long lasting strike that creates such internal hostility that the Guild’s overall reputation and image suffers.
Of course, that scenario can be avoided if there is a reasonably well thought through strategy behind the tough words.