Hollywood’s actors union (SAG-AFTRA) and major Hollywood studios have agreed to extend their current contract negotiations until mid-July.

The previous contract was set to expire at midnight on June 30, but the two sides have now agreed to extend it through July 12. This agreement gives them more time to work out a new deal and avoid a potential work stoppage.

The extension comes amid ongoing labor tensions in Hollywood. Members of the Writers Guild of America (WGA) walked off the job on May 2, forcing many film and TV productions to shut down. A-list actors had voiced their support for the actors’ union, saying they were ready to join a strike if a “transformative deal” was not reached on issues like higher base pay and the use of artificial intelligence.

While the negotiations are described as “extremely productive” by union leaders, the extension is not seen as a sign of weakness. SAG-AFTRA stated that they are determined to secure the “righteous contract” their members deserve.

The entertainment industry has faced significant challenges in recent years, with the rise of streaming services and the erosion of traditional television advertising revenue. Analysts say the studios are under pressure to make their streaming services profitable after investing heavily in content.

The ongoing writers’ strike has already taken a toll on businesses that support the industry, and a potential actors’ strike would further compound the economic impact. Industry experts estimate the 2007-2008 writers’ strike cost the California economy an estimated $2.1 billion.

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Both sides will have more time to address the complex issues on the table and try to reach an agreement that satisfies the demands of the actors while also ensuring the financial viability of the studios.