Thank you for this concise business history lesson. Business is exclusively about profit … and some would say that profit is greed. Ford’s goal was to keep his monopoly on the entry level car market and to do that, he needed to build a mega factory, that would, amongst other things, cut his suppliers out (Dodge). Ford needed all the workers he could get and he needed them happy … so he gave them a pay rise (and it kept the unions out). For Dodge it was attack or die. The Ford River Rouge complex mega factory was built at huge expense and continues to this day.
The current SAG issue is about how to make money in a saturated market with dwindling revenues. The engineers that run Netflix, Amazon etc saw an opportunity to cut distribution costs whilst keeping production. Now that they have proved that distribution is cheap and easy, they need to cut their production costs to keep profits in line. So the engineers are bullying the artists with the threat of generative AI (amongst other things). But this is only another chapter is a much longer cycle that has always been inevitable.
If you look at the VFX industry since the arrival of water sims in the Abyss, the 2000’s were a halcyon production environment of astonishing technical achievements and an explosion of production budgets and profits. But from the 2010s until now the tech explosion has stagnated and it has basically been how to do the same thing bigger, faster & cheaper. With generative AI’s arrival, it’s heralding the end of a cycle from a prestige industry to a new epoch of video everywhere.
SAG is absolutely right to position itself. It is a defining moment for the communication industry as a whole, even for the flame artists in the ad world. It is about the value of what is produced and that value is waning very fast.
For me, the closest comparison is the debate between those that buy BIO and the large majority that don’t care. The BIO argument has the moral high ground … but how much are you prepared to pay for that position and how much is wall street prepared to believe that they can still make money on your choice?
Two thoughts to your excellent summary.
Yes business is all about profit. However, profit is in part related to the tools that are creating value, whether they are software or humans. Short-term profit optimization squeezes every drop. Long-term profit optimization (or value creation) works better if you maintain your tools in good working order. That’s the profit vs. greed axis. If you go too far, you risk undermining your future profits.
At a finer level, humans can operate at an average productivity based on standard terms. They can slide into suboptimal, if they feel mis-treated. They can also go above and beyond if they feel valued, respected, and rewarded for the extra mile. Therefore the fine art of business leadership is getting the most value out of your assets for an acceptable cost. The attitude of dictating and disregarding, generally does not generate optimal results in most cases. There are exceptions, but they’re just that. It seems we’re in medium term phase of maximum extraction based on two decades of buyer job markets.
The other point is that distribution costs have come down in some areas (theater to streaming), not so much in others (cable to streaming). But the bigger flaw that’s now emerging in the streaming world is that they bundled all you can eat content at a prix-fix-menu. That’s bad math. They turned a profitable steakhouse into a Golden Corral buffet place. Basically cost have gone up, but revenues have stayed flat and decoupled. That’s turning out to be a big mistake. But now the consumer has come to expect binge shows and endless choice. Taking that away will make them question the subscriptions they have, even though they already don’t cover the cost. This is headed to a big disappointment all around. The individual decisions all made sense, the bigger picture doesn’t. Forget what that is called.
May this be a lesson to others in the unstoppable drive to turn everything in life into a subscription.
WOW … I concur with you. And what a fantastic discussion. Maybe we should set a LOGIK TV economics and business thread ? 
Did a quick pass of comparing the various parameters between video content channels, also through in perpetual vs. subscription software since that’s a related hot potato for many.
As you can see streamers were chasing that one blue box, but with it came a lot of yellow and red…
I’m sure there’s more detail I’ve forgotten, and some of it opinions may vary. So take with a grain of salt.
I don’t know what are perpetual vs. subscription software, Games I presume ?
Any software. Flame is an annual subscription. You have to renew to keep using it. Updates are free. Others are perpetual licenses, you pay once and use forever, but have to pay for upgrades (Nuke used to be that way).
All software used to perpetual and then a trend towards subscription happened the last 10 years which some folks hated like the plague. The argument being that they were held hostage for using the software they paid for. Even though all software is just licensed, you never really own it. It’s just a change in payment terms.
Software companies liked it because it evened out the revenue streams, with subscription being evenly spread vs. lumpy around releases. Also, with subscriptions people remain engaged, with perpetual licenses they had to chase people to sign up for the updates whenever it happened. There were some ‘cheap’ users that would hang on to a perpetual license for 8+ years and skip all the upgrades and then kick and scream if the software no longer worked on newer OS releases. Became borderline silly.
Subscriptions are generally better for the user too. It’s less cash upfront, you get to use the software immediately usually for 1/10 - 1/20th of the cash out the door on day 1, plus it gets updated frequently rather than just once every 18 months.
There are some downsides to subscriptions though, since the generally call home to verify status. There are multiple scenarios where your software may stop running an inopportune time while on a deadline - company goes out of business, server on the other side of a geopolitical conflict, natural disasters, air gap requirements, etc. Pretty rare, but worth keeping in mind.
But we digress from the Hollywood topic. It’s semi-related with the move to everything being a subscription and the economics and downsides of that.