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WGA and SAG-AFTRA strikes send shockwaves; here’s how Indian AVGC studios are adapting to challenges

The WGA has been on strike since 2 May 2023 and it took a bigger shape as the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) joined them, giving a big blow to the global entertainment industry.

Two major reasons for writers to go on strike is: the prevalence of streaming services and the challenge posed by AI. Writers hence, are struggling to survive. SAG-AFTRA has similar reasons to go on a strike as the WGA. While the production of TV shows and films has been affected, the ripple effects have been felt on the post-production and the VFX industry as well.

VFX artists in the U.S. who had no unions, faced the brunt of layoffs. As the projects got delayed, there was very less work for the post-production people. Projects at Disney, Warner Bros. Discovery, NBCUniversal, Netflix, Paramount and many other major studios got delayed or stalled mid way, resulting in job losses for this sector.

According to reports, DNEG’s London studio axed jobs of 60 of its VFX artists and asked its employees to accept a 25 per cent pay cut. A freelance compositor mentioned in his social media post that the company aims “to preserve as many jobs as possible during challenging times” using this strategy. Many VFX artists around the world are indirectly facing the brunt of the strikes, leading to layoffs. Lucasfilm closed down its Singaporean ILM office, leading to 300 plus layoffs.

Being a major outsourcing hub, the Indian AVGC industry witnessed the ripple effects of the WGA & SAG-AFTRA strike. We spoke to some animation and VFX studios to understand how the WGA strike is affecting or has affected the Indian companies, whether it is disrupting their workflows and if it is leading to layoffs in the Indian AVGC industry.

Impact on Indian studios and their operations

“The strike could lead to significant delays in the release of animated series and films as studios must postpone production,” said Toonz Media Group CEO P Jayakumar. “Not just Hollywood or American shows and movies, even Indian movies and television series that are being produced in American studios will have to face delays and disruptions leading to uncertainty in sticking to the timelines. On the other hand, demand for regional content is expected to rise and there might also be demand for Indian talents, if the strike lasts for an extended period. However, this is not to be overestimated as the ripple effect of the strike might disrupt advertising revenues, pre-sales and budgets.”

Even Prayan Animation Studio CEO Vinayan V feels that the strike has generated a number of difficulties, particularly for productions that rely largely on the actors and authors who are involved in it. “We have already seen many delays and changes on the production schedule for the announced projects,” he said. “This will create a recession-like effect in our industry which in turn will affect our economy as well.”

But Jayakumar doesn’t foresee any significant impact on streaming media content at the moment. “The full impact of the strike in areas such as streaming media and other verticals of the media and entertainment industry is yet to be seen.”

The strike has caused slight delays for some of the international productions of Toonz Media Group. For instance, one of their animated feature films is set to feature voice cast from leading Hollywood actors but they are waiting for the strike to get over to get this done.

When asked about the plans to manage any potential delays or disruptions in their project timelines incase the strike continues for an extended period, Jayakumar said, “Even though the situation presented is hypothetical, and while we hope the strike will end soon, we are also pragmatic to deal with any implications that might result if the strike lasts long. We do have a business contingency plan encompassing strategies like going back to the drawing board to revise project timelines, working with stakeholders to find a feasible win-win situation and also to keep in place robust policies to meet all project requirements including manpower requirement.”

Vinayan added that the ongoing strike doesn’t affect them directly but “creates a slowdown in the industry as a whole. We are seeing some delay in new project announcements and reduction in production outsourcing. Maybe in the coming months we will be having a better idea on how it is going to affect our studio.”

Bot VFX co-founder Sreyan Bardia said that the AVGC industry in India has been a vital part of the global entertainment ecosystem, providing high-quality and high-volume services and contributing to numerous international projects. “With many/most North American based productions being affected by the strike and put on hiatus, there is a significant decrease in work being outsourced to India at the moment. Major American VFX facilities are prefering to keep their work in-house until there is more clarity and resolution regarding the strike.”

“Moreover, the impact of the strike on Indian studios may not be limited to just the duration of the strike itself. Even after the strike ends, there could be potential delays in resuming projects as studios need time to ramp up production. The Indian studios that have been largely dependent on international work are bending over backwards to fill up their inventory. In some scenarios, many of them have started to diversify their offerings by exploring domestic projects or collaborations with other international markets, and finding creative ways to sustain their operations and/or manage their cash flows during this challenging period,” Bardia pointed out.

According to Bot VFX co-founder, the strike impacting both feature film productions and streaming media alike, irrespective of the issues, whether related to residuals or AI, the studios may postpone or halt streaming projects until there is more clarity on the strike’s resolution. This may impact their involvement on these projects.

“We do not foresee any long-term impact of any changes to the residuals model on the VFX industry. We expect that the studios / content owners will tweak their financial models to accommodate any changes in the residual model if there are any, but we do not see this materially impacting either the volume or the pricing of VFX services at the moment,” he said.

As Bot VFX heavily relies on work from Hollywood productions, any delays or shutdowns in these projects have a significant impact on their operations. “Like most other India-based facilities, we are experiencing a softening of demand due to the strikes. In some quadrants, we are also feeling additional downward pressure on pricing. There is now more competition arising from abundant industry capacity against limited demand.”

Impact on employment

India-based studios have also been resorting to “layoffs.” A large number of employees have lost their jobs in the last few months. The industry leaders explained that the reasons behind such a situation affecting employees are complex and involve multiple factors.

“It’s crucial to be clear that while certain studios may have had difficulties as a result of the strike, there may also be other variables causing these layoffs,” pointed Vinayan. “There have been rumours of layoffs in Indian studios. Such decisions may also be influenced by market changes, changing project needs, and economic situations.”

Other factors causing layoffs include “the interplay between the pandemic implications on the animation industry, rise in streaming services, cost of production and increasing use of automation,” added Jayakumar. “Also, the cost of production of big-budget films for the silver screen is on the higher side compared to the production cost for streaming services. This led to decrease in demand for studios in India affecting the industry as a whole. The ongoing strike didn’t have a direct impact so far but it could affect indirectly if projects are delayed or shelved.”

Bardia also mentioned that some companies are laying off artists because the drop in demand puts them in real financial straits and it is a matter of survival. “Either they chop off several limbs or die altogether. But there are also companies implementing layoffs using the strikes as a cover to realign, or cleanse the sins of under planned overexpansion. For those companies, it is not a matter of survival but a path to improving financials.

“It’s worth noting that at Bot VFX, we have built a strong culture that emphasises the value of the artists and aims to avoid layoffs, even in such challenging times. We have a strong focus on working together as a team to weather market forces; whether it was facing the pandemic or facing the ongoing strike. As owners and managers of the business, we place extremely high emphasis on the goal of averting layoffs,” he said.

Vinayan had something similar to say: “At Prayan, we continuously work to provide the greatest possible assistance to our staff members through trying situations.”

Functioning amidst the strike

As an industry, the Indian studios are all in this together.

“We are closely collaborating and communicating with our American and other global partners and watching the developments closely. Toonz Media Group and its stakeholders are confident to face the challenges holistically while also trying to minimise any adverse impacts,” Jayakumar shared.

Talking about maintaining a constant communication with them during the challenging time, Bot CEO and founder Hitesh Shah said, “We are always in constant communications with our clients on a normal basis, and in situations like these strikes, the connect is even stronger.  It is a two-way active dialog. Throughout the strike, our clients have shared the changes they are making to the schedules and workloads for the shows we engage on, and we in turn recalibrate our scheduling and workload plans accordingly and share back with them. It’s truly a collaborative effort between our team and theirs to wade through the complex shifts during the strike, and the thornier planning issues once the strike is over.”

This is a global event and not an isolated affair. Facing the uncertainty of a prolonged WGA strike, the primary focus at Bot is to manage potential disruptions in their operations. While project timelines may be affected, their major concern lies in navigating through the operational challenges caused by the strike’s impact on the global entertainment industry.

“We have consciously shifted our focus and are taking proactive measures to upskill our team and enhance our capabilities. We believe that preparing for the future is essential, and we are investing in sharpening our saw. Our current focus is to leverage this period to better equip ourselves to handle a potential influx of projects once the strike resolves and productions resume at a regular pace,” Bardia said.

Vinayan explained, “To keep our clients and partners aware of any changes and to seek out cooperative solutions to the problem, we strive to maintain open contact with them. In order to co-ordinate with our American counterparts, we have been using a variety of communication channels to stay in touch and talk about solutions for overcoming the difficulties brought on by the strike. We are dedicated to exploring solutions to secure the continuance of our programmes and partnerships since maintaining fruitful cooperation throughout this period is essential.”

While the animation industry hasn’t been impacted much, the VFX industry witnessed a lot of layoffs especially international studios and Indian studios doing service work. If the strike prolongs, we would witness dire consequences in the Indian VFX industry. Hopefully, the strike comes to an end soon and studios go back to normalcy.

Update as of 27 September: To the relief of the US entertainment industry, the WGA has reached a tentative agreement with AMPTP. The deal points of the three-year contract between the two parties have been released. The contract is still subject to a ratification vote from WGA members, and can go into effect if a majority of voters support it. The ratification vote for the contract will take place between 2 and 9 October.