Hollywood is in decline – union strikes are partly to blame, says Scott Galloway

In a recent interview with Scott Galloway, a marketing professor and podcaster at New York University, a film industry outsider offered some provocative insights about the “vanity industry” of filmmaking in Hollywood, an “industry in structural decline,” and why he thinks the screenwriters’ and actors’ unions have done a terrible job with their recent strikes, accomplishing the opposite of what they intended.

I’ve been listening to Scott Galloway’s insights on his podcasts Pivot and The Prof G Show for some time now. He’s known for providing thought-provoking commentary on the economy, but not usually on the film industry. That was until I listened to the latest episode of Matthew Belloni’s podcast The Town, where he gave a scathing assessment of the state of Hollywood and how he believes unions have done their members and the industry as a whole a disservice with their recent strikes. And I think he’s right.

Hollywood’s big tech problem – Scott Galloway on “The Town with Matthew Belloni”

The entire episode is worth listening to:

Why the strikes gave studios the perfect excuse to cut costs

Scott Galloway criticized the writers’ and actors’ strikes, saying they had no impact and allowed the industry to regroup during the strike. He argues the strikes resulted in a shift of wealth from union members and smaller streamers to Netflix. Galloway believes the gains made by the unions (e.g. 5% pay raise, protection from AI) were insignificant compared to the losses from months of unemployment. He suggests that after the strike, there are now fewer writers making money as overall buys and orders have declined, and that the strikes gave streamers the perfect excuse to cut redundant costs and projects as they were already in the midst of an unsustainable “streaming bubble” where there was fierce competition with each other.

At a time when studio spending has spiraled out of control due to fierce competition between streaming platforms, which has naturally benefited writers and the creative community in the form of a ton of work, the strikes have “forced a multilateral spending pause” that will allow them to reevaluate their spending and figure out who they really need and who they don’t.

Scott Galloway on “The Town with Matthew Belloni”

What should have happened: Unions and studios jointly sue AI companies

Galloway argues that unions should have joined forces with studios to fight against tech companies and AI, rather than fighting each other. He advocates for studios to sue AI companies when they crawl their content without compensation, and criticizes the entertainment industry for not more aggressively representing its interests against tech companies and AI.

Finally, in other media sectors, such as newspaper publishing, publishers like the New York Times are suing OpenAI for “stealing” their content to train their large language models (LLMs), and major record labels are suing AI music startups Udio and Suno for “mass copyright infringement” (we recently reviewed these AI music services). One has to agree with Galloway and wonder why the film industry still has an inconsistent policy of appeasement toward AI companies instead of pressuring them in court.

If the union had any sense, they would spend all their money hiring very aggressive law firms and getting every single studio on their side. They should get together and try to find a way to sue all the LLMs and AI companies, for example, when they crawl their data. They have a share in that revenue. Instead, they’re fighting each other, making Netflix even richer and letting the AI ​​and LLMs continue to crawl their data.

Scott Galloway on “The Town with Matthew Belloni”

Paramount Pictures sold to son of tech billionaire

The recent announcement of Skydance’s acquisition of Paramount Pictures, David Ellison’s production company, may only underscore the fact that Hollywood is selling out to the big tech companies rather than fighting them off in court—after all, David Ellison is the son of billionaire Larry Ellison, founder of Oracle, a tech giant heavily involved in generative AI data centers. (This acquisition was announced weeks after Galloway’s interview with Belloni was recorded, so it is not a topic in this podcast.)

Hollywood is “a vanity industry in structural decline.”

As an economist looking at the numbers, Scott Galloway gives a devastating assessment of the film industry.

He suspects that the streaming market is consolidating and predicts further industry restructuring. Galloway advises young people to be cautious when entering the entertainment industry, calling it a “vanity industry” in structural decline. He believes the future of entertainment is shifting toward smaller screens (e.g. TikTok, YouTube) and away from traditional Hollywood productions.

As an example, he cites that 87 percent of SAG AFTRA members did not have health insurance last year because they earned less than $25,000, while only the top 10 percent are able to make a living, with the top 1 percent raking in the majority of the money.

Are we filmmakers just chasing an unrealistic dream?

It’s interesting and sobering to hear the thoughts of an outsider to the film industry giving his assessment of the situation. Are too many people chasing the Hollywood dream when it doesn’t have much of a future in our world? Is Hollywood in decline? It’s sad to think about and admit, but I’m curious to hear your thoughts on the matter. Add your two cents in the comments below, I’d love to start a discussion about it.