On July 14, the leading U.S. actors’ union, the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) went on strike, joining the Writers Guild of America (WGA), whose work stoppage began on May 2. Both are in contract disputes with the Alliance of Motion Picture and Television Producers (AMPTP), the organization that negotiates on behalf of more than 350 studios, production companies, and streaming platforms.
The two main issues in both cases are compensation and artificial intelligence. The actors and writers are asking for adequate pay and benefits—87% of SAG-AFTRA members make less than the $26,000 per year needed to qualify for health insurance—with particular attention being paid to streaming platforms’ compensation models. With AI, the writers and actors want guidelines for how AI can and cannot be used for film and television production, to protect their digital likeness rights and their livelihoods.
How will the strikes affect the entertainment/character licensing sector? Some of the impacts include:
- Halted production. With a few exceptions that have received waivers, most major Hollywood studio films, as well as TV series, are on hold as the actors and writers negotiate with the studios. Depending on how long the strikes continue, that could mean a gap in new films and new TV episodes released, leaving a void for those involved in making and selling licensed merchandise tied to those properties. A significant pause in production could lead to a loss of fan interest as well, which would impact sales of products longer-term.
- Promotion difficulties. Films and TV episodes that have completed production or are at a stage where they can be completed, even as the actors and writers strike, will still be released, but any promotional activity by actors or writers has ceased. This includes red carpets, award shows, film festivals, and media interviews. Especially important for the licensing business, striking actors and writers are also not attending conventions such as the just completed San Diego Comic-Con and, if the strike continues, the upcoming New York Comic-Con. All of these promotional events are important for generating fan enthusiasm, and their absence could impact box office numbers, ratings, and merchandise sales alike.
- Ancillary impacts. Some areas of the entertainment industry are less affected by the strikes, because their writers and actors are part of separate unions, are under separate SAG-AFTRA contracts, or are not unionized. These include reality shows, animation productions, commercials, video games, soap operas, productions overseen by studios outside the U.S., and influencer content. That said, there are still ramifications. Actors who are part of the SAG-AFTRA strike and also involved in a production in one of these adjacent areas—for example serving as voice actors in an animation series or as the host of a reality show—may either not be allowed to continue working under strike rules, or choose not to continue in solidarity. In some cases, this is affecting the ability to produce or promote productions in these separate but aligned sectors; several animation and video game productions, as well as U.K. shows such as Doctor Who, are on hold, potentially impacting sales of licensed products over time.
- Economic impact. The strike affects not only the 160,000 actors and 20,000 writers who are striking, but everyone tied to the affected productions, directly and indirectly: crew, caterers, administrative staff, launderers and dry cleaners, florists, restaurant and coffee shop owners, and more. This is a big problem for a city like Los Angeles where the entertainment industry is dominant, but also to a degree for any city or region where film or TV production is happening. While the consequences for licensed merchandise sales overall are likely not huge, at least in the short term, there are pockets—retailers of licensed merchandise based in L.A. for example—that could see an impact on revenues. Over time, the harm to the industry could be more profound, with existing economic concerns magnified by the strikes leading to fewer productions overall and fewer opportunities for licensed merchandise programs, not to mention other reverberations, such as layoffs.
All of these repercussions will be magnified if the strikes continue for any length of time—a 2000 commercial actors’ strike went on for six months—which is what many entertainment industry observers are predicting. This would have major implications for both sides of the disputes, not to mention all the business sectors that depend on them for their own livelihoods, including entertainment/character licensing.
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