Striking Writers Find Their Villain: Netflix

Just over a week after thousands of television and movie writers took to picket lines, Netflix is feeling the heat.

Late Wednesday night, Netflix abruptly said it was canceling a major Manhattan showcase that it was staging for advertisers next week. Instead of an in-person event held at the fabled Paris Theater, which the streaming company leases, Netflix said the presentation would now be virtual.

Hours earlier, Ted Sarandos, Netflix’s co-chief executive, said he would not attend the PEN America Literary Gala at the Museum of Natural History on May 18, a marquee event for the literary world. He was scheduled to be honored alongside the “Saturday Night Live” eminence Lorne Michaels. In a statement, Mr. Sarandos explained that he withdrew because the potential demonstrations could overshadow the event.

“Given the threat to disrupt this wonderful evening, I thought it was best to pull out so as not to distract from the important work that PEN America does for writers and journalists, as well as the celebration of my friend and personal hero Lorne Michaels,” he said. “I hope the evening is a great success.”

Netflix’s one-two punch in cancellations underscored just how much the streaming giant has emerged as an avatar for the writers’ complaints. The writers, who are represented by affiliated branches of the Writers Guild of America, have said that the streaming era has eroded their working conditions and stagnated their wages despite the explosion of television production in recent years, for much of which Netflix has been responsible.

The W.G.A. had been negotiating with the Alliance of Motion Picture and Television Producers, which bargains on behalf of all the major Hollywood studios, including Netflix, before talks broke down last week. The writers went on strike on May 2. Negotiations have not resumed, and Hollywood is bracing for a prolonged work stoppage.

Last week, at a summit in Los Angeles a day after the strike was called, one attendee asked union leaders which studio has been the worst to writers. Ellen Stutzman, the chief negotiator of the W.G.A., and David Goodman, a chair of the writers’ negotiating committee, answered in unison: “Netflix.” The crowd of 1,800 writers laughed and then applauded, according to a person present at that evening who spoke on condition of anonymity because of the sensitivity of the strike.

The last time the writers went on strike, in 2007, Netflix was little more than a DVD-by-mail company with a nascent streaming service. But over the past decade, Netflix has produced hundreds of original programs, helping to usher in the streaming era and upending the entertainment industry in the process.

Initially, Netflix was cheered by the creative community for creating so many shows, and providing so many opportunities.

Demonstrations over the past week have underscored just how much writers have soured on the company. In Los Angeles, Netflix’s Sunset Boulevard headquarters have become a focal point for striking writers. The band Imagine Dragons staged an impromptu concert before hundreds of demonstrators on Tuesday. One writer pleaded on social media this week that more picketers were needed outside the Universal lot, lamenting that “everyone wants to have a party at Netflix” instead.

On Wednesday, demonstrators were out in force outside the headquarters. “Ted Sarandos is my dad and I hate him,” read one sign. Another said: “I shared my Netflix password. It’s ‘PAY ME’!”

While the writers marched, the veteran television writer Peter Hume affixed fliers to picket signs that read “Cancel Until Contract” and “Please Cancel Netflix Until a Fair Deal Is Reached.”

Mr. Hume, who has worked on shows like “Charmed” and “Flash Gordon: A Modern Space Opera,” said the streaming giant was responsible for dismantling a system that had trained writers to grow their careers into sustainable, fulfilling jobs.

“I have 26 years of continuous service, and I haven’t worked in the last four because I’m too expensive,” Mr. Hume said. “And that’s mostly because Netflix broke the model. I think they put all the money into production in the streaming wars, and they took it away from writers.”

Netflix’s decision to cancel its in-person showcase for marketers next week caught much of the entertainment and advertising industry off guard.

The company had been scheduled to join the lineup of so-called upfronts, a decades-old tradition where media companies stage extravagant events for advertisers in mid-May to drum up interest — and advertising revenue — for their forthcoming schedule of programming.

Netflix, which introduced a lower-priced subscription offering with commercials late last year, was scheduled to hold its very first upfront on Wednesday in Midtown Manhattan. Marketers were eager to hear Netflix’s pitch after a decade of operating solely as a premium commercial-free streaming service.

“The level of excitement from clients is huge because this is the great white whale,” Kelly Metz, the managing director of advanced TV at Omnicom Media Group, a media buying company, said in an interview earlier this week. “They’ve been free of ads for so long, they’ve been the reach you could never buy, right? So it’s very exciting for them to have Netflix join in.”

So it came as a surprise when advertisers planning to attend the presentation received a note from Netflix late Wednesday night, saying that the event would be virtual.

“We look forward to sharing our progress on ads and upcoming slate with you,” the note said. “We’ll share a link and more details next week.”

The prospect of hundreds of demonstrators outside the event apparently proved too much to bear.

Other companies staging upfronts in Manhattan — including NBCUniversal (Radio City Music Hall), Disney (The Javits Center), Fox (The Manhattan Center), YouTube (David Geffen Hall at Lincoln Center) and Warner Bros. Discovery (Madison Square Garden) — said on Thursday that their events would proceed as normal, even though writers were planning multiple demonstrations next week.

Mr. Sarandos’s decision to pull out of the PEN America Literary Gala will not disrupt that event either. Mr. Michaels, the “Saturday Night Live” executive producer, will still be honored, and Colin Jost, who co-hosts Weekend Update on “Saturday Night Live,” is still scheduled to M.C.

“We admire Ted Sarandos’s singular work translating literature to artful presentation onscreen, and his stalwart defense of free expression and satire,” PEN America said in a statement. “As a writers organization, we have been following recent events closely and understand his decision.”

The writers’ picket lines have successfully disrupted the productions of some shows, including the Showtime series “Billions” and the Apple TV+ drama “Severance.” On Sunday, the MTV Movie & TV Awards turned into a pretaped affair after the W.G.A. announced it was going to picket that event. The W.G.A. also said on Thursday it would picket the commencement address that David Zaslav, the chief executive of Warner Bros. Discovery, is scheduled to give on the campus of Boston University on May 21.

One of the writers’ complaints is how their residual pay, a type of royalty, has been disrupted by streaming. Years ago, writers for network television shows could get residual payments every time a show was licensed, whether for syndication, broadcast overseas or a DVD sale.

But streaming services like Netflix, which traditionally does not license its programs, have cut off those distribution arms. Instead, the services provide a fixed residual, which writers say has effectively lowered their pay. The A.M.P.T.P., which bargains on behalf of the studios, said last week that it had already offered increased residual payments as part of the negotiations.

“According to the W.G.A.’s data, residuals reached an all-time high in 2022 — with almost 45 percent coming from streaming, of which the lion’s share comes from Netflix,” a Netflix spokeswoman said.

“Irrespective of the success of a show, Netflix pays residuals as our titles stay on our service,” the spokeswoman said, adding that the practice was unlike what network and cable television did.

Outside Netflix’s Los Angeles headquarters on Wednesday, writers on picket lines expressed dismay that the company was beginning to make money off advertising.

“If they make money doing ads, my guess would be that ads will become a bigger revenue stream for them,” said Christina Strain, a writer on Netflix’s sci-fi spectacle “Shadow and Bone.” “And then we’re just working for network television without getting network pay.”

Sapna Maheshwari contributed reporting.