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Why The SAG-AFTRA Strike Is Probably Good For Netflix

The ongoing strikes led by Hollywood writers and actors, which have targeted Netflix among others, have surprisingly resulted in a financial windfall for the streaming giant. In the latest quarterly earnings report released on Wednesday, Netflix announced that it foresees a remarkable increase in free cash flow for 2023, now expecting to reach a substantial $5 billion. This surge in cash flow is attributed to reduced operational costs stemming from the strikes, causing production delays.
Previously, the company had estimated its free cash flow for the year to be $3.5 billion. However, the positive impact of the labor unions' actions has exceeded expectations, paving the way for even greater financial gains.
Netflix revealed its intention to utilize a portion of the surplus cash for stock buybacks, further enhancing its position in the market. As the strikes continue, Netflix seems to be turning a challenging situation to its advantage, propelling the company forward with increased resources and financial flexibility.
Netflix and various other streaming services have found themselves in the crosshairs of disgruntled actors and writers who argue that the tremendous expansion of streaming video has been achieved at the cost of those responsible for creating hyper-popular content.
In a powerful display of their grievances, actors have taken to social media to post images of their actual checks from streaming residuals. These posts aim to shed light on the disparity between the immense success of streaming platforms and the compensation received by the creative talents behind the content, sparking a public conversation about fair compensation and recognition for their valuable contributions.

International Assets

Netflix's strength lies in its remarkable international production capabilities, setting it apart significantly from its competitors. A significant portion of their content originates from countries unaffected by the ongoing strike, granting them a strategic advantage.
This capacity to produce content worldwide was demonstrated during the pandemic, as viewers turned to shows crafted outside the United States for entertainment. French mystery thriller "Lupin" and the comedy "Call My Agent!" were among the popular non-U.S. creations that attracted a substantial audience, as highlighted by SVB MoffettNathanson analyst, Michael Nathanson.
In addition to its global production prowess, Netflix enjoys the advantage of not being reliant on struggling sectors of the entertainment industry, namely theatrical and broadcast television. This flexibility liberates them from the challenges faced by those sectors, positioning the company in a favorable and forward-looking position.

A.I and Machine Learning

Amid these ongoing strikes, an intriguing job opportunity at Netflix has surfaced - a machine learning product manager role offering a staggering salary of up to $900,000. The timing of this listing is notable, especially considering that the use of AI has become a contentious issue in the strikes. Studios have proposed compensating extras minimally for granting perpetual rights to their AI-generated likenesses.
In addition to the eye-catching job offer, Netflix's broader vision for machine learning is noteworthy. Their website's "machine learning" section reveals plans to expand the use of AI beyond personalized recommendations within the Netflix app. The streaming giant aims to leverage machine learning to shape its catalog of movies and TV shows by studying the characteristics that lead to content success. Moreover, Netflix envisions optimizing the production of original content through AI, suggesting that machine learning will play a significant role in determining which titles are created in the future.


With actors and writers on strike, the company faces the prospect of reduced payments to fewer individuals involved in producing shows. Some observers with a conspiratorial mindset have speculated that studios might be covertly welcoming the strikes as a means to improve their financial standing by cutting costs. However, I'm hesitant to fully subscribe to this theory as intentionally causing one's own downfall feels imprudent and self-destructive, akin to deliberately collapsing the temple upon oneself.
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