Wednesday never comes fast enough. We stole so much material this week, even Jim Harbaugh had to blush.

We’ve had a bunch of old reader requests on WGA stuff. We didn’t have any opinions on it, so we had to wait for some to come in.

Alright here we go.

The Writers’ Guild: A Decline in 3 Acts

First off, a lot people were wondering why the WGA deal is only 3 years, since the last time a strike happened was a while ago.

The answer is: The deals are always usually 3 years. They usually just renew the deal without a long negotiating battle.

I. What have we agreed to?

Terms:

• No AI: AI cannot be used to generate source material, scripts, or anything like that; as for using writer’s work to train AI, that’s a little more complicated
  

• Residuals on streaming: There’s gonna be a big increase when it comes to streaming and its foreign subscribers; also more transparency around streaming numbers
  

• Increased minimum rates for writers: self-explanatory
  

• Minimum # of writers in the room: also self-explanatory

II. Why Tech is important and what that means for writers

TL;DR: Netflix doesn’t need the WGA. It could very well squash the next round of negotiations (2026ish) without an agreement and still carry on.

But first, a victory lap: A few newsletters ago, we made some kind of prediction (we can’t find it right now, but it’s there). Basically, we said that Netflix stock was gonna pop because ‘streamers gonna stream’ and their costs would basically go to 0.

We were right. No big deal.

Netflix Stock on May 2nd (when the strike began): ~$317
Netflix Stock on Sep 27th (when the strike ended): ~$377

• Basically, Netflix is confident that its business isn’t going to be hampered by anything, especially unions. Why? They’re just raised their prices again.
  

• All this to say this: Netflix could keep producing movies in foreign countries + licensing domestic content without losing any sleep on whether they come to an agreement with any union.
  

• It’s such a powerful force in the industry, it could simply hold out of any talks in the next round of WGA negotiations and balk on any deal it doesn’t want. Its shareholders, who understand the sliding nuance between profits and growth, will stay put.

BTW - we don’t even know what that would look like, and we’ve also overlooked the Ad-supported option on Netflix and what effect that would have on any further deals with the WGA.

III. Okay, what’s the bottom line? What can I use in my opinion battles at TGI Friday’s?

1. Content is a hard business. It’s always been a hard business. It’s been subsidized by ads for the most part, and there’s a lot of friction between cable companies, middle men, etc.
   

2. This makes the industry ‘ripe’ for disruption in a technologists’ eyes, and for the most part, it’s disrupt-able.
   No Commercials + Simple Subscription = High Satisfaction
   

3. Technology has hit the lamb and tuna fish in taking advantage of the existing TV/Movie status quo:
   

   1. finding points of leverage (using capital as a weapon/sacrificing profits for growth);

   2. Understanding how to scale, digitally speaking;

   3. harnessing data to anticipate viewer needs;

   4. embracing new technologies (AI)

Those 4 things are either directly/indirectly making writers unnecessary, at least on their own platform, and at least in the U.S.

Now, while we can find merit in this argument, we (personally) don’t really agree that writers are unnecessary (we write this newsletter, duh)*.

But it’s not gonna be like writer’s can’t find work anywhere in television etc. We think it’ll be more, ‘writers who don’t know how to use AI’ won’t be able to find work.

Also, just remember that no one knows what’s going on.

_{*We don’t use AI. We’ve tried. And we just can’t.}

Again, this is not investment advice.

What AI made this week

Huh, still weirdly handsome

Have a great week!

Ahmed and Peter