Courtesy of Marvel

August 20, 2021

Movie Contracts in the Age of Streaming

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Just two weeks ago, Scarlett Johansson filed a lawsuit against Disney for the simultaneous release of Black Widow in theatres and on Disney+. According to Johansson, the streaming release of the film sapped her of about $50 million in projected box office earnings. And following Johansson’s suit, Emma Stone is also considering taking legal action over the hybrid release of Cruella. But the problem these actresses face is not the difficulties of reopening theatres post-pandemic, nor that people would rather stay home, but the result of a shift in contractual power in the era of streaming. And this problem has been going on for some time. 

Throughout movie production history, writers, producers, directors and actors/actresses have worked with contracts based on two types of payment standards: fixed and contingent compensation. Fixed compensation is exactly what you would think: it’s a sum of money paid upfront to the contractor, regardless of how well the movie does. Contingent payment, on the other hand, is much more flexible as it relies on a percentage cut of the total film profit.

Most of the high-end Hollywood deals rely on a combination of the two, where talent is guaranteed a fixed amount, and can receive additional payment in the form of contingent compensation based on how much the film makes. And while the methods used to pay contingent contracts are very complicated, all contingent deals rely on, more or less, concrete numbers that come from ticket sales (a.k.a. box office), digital and DVD sales and property rights sales. 

While one could argue that the Video On-Demand sales of Black Widow fall under the category of digital sales and should be included in Johansson’s contract, this isn’t the case. Disney decided to keep streaming and box office revenue separate, and it’s not just because they’re greedy (well, it might be). 

There’s a logical reason for keeping these two separate, and that’s because streaming and the theatre operate quite differently. Sure, that’s obvious: with one, you pay a monthly subscription and get to watch whatever you want from home, and with the other, you pay for a single viewing. But that’s not the only difference. The contracts for talent employed by movie studios and those being paid by streaming services are completely different. 

Rather than creating a contract that offers bonuses for a production’s performance, services like Netflix, Hulu and HBO generally pay fixed prices upfront to the talent and production company. And in this scenario the contractors don’t have a choice.. 

Unlike the box office, streaming generally does not rely on sales, but rather separate viewership data that is more often than not undisclosed. This lack of transparency makes it difficult for talent and independent production companies to assess how much they should be getting paid. And because streaming services reserve the right to be the sole distributor of a new film or show there is little promise for the contractors to get paid in the future.

In the case of Black Widow, even though Disney disclosed how much the film made from streaming, there was already a precedent in place for Disney to keep that revenue to itself. Now, Disney + owns the right to distribute the film, and its workers have already received compensation. 

But like I said before, this isn’t a new issue. Rather, a lack of transparency about movie metrics on streaming services has persisted since the founding of Netflix. Questions about how viewership translates into revenue and whether or not certain productions draw in new subscribers remain unanswered. The only difference now is that the pandemic has caused movies to shift towards the streaming scene. And with more hybrid launches like In The Heights and Space Jam, we may be on the way to hearing even more buzz about the ethics of streaming contracts. 

The solution to these contractual issues is still unclear, so we’ll just have to wait and see. Because depending on the results of Scarlett Johansson’s lawsuit, the streaming industry might have to embrace more transparency with their statistics and with their contracts. Hopefully, we’ll start seeing less complaints from the makers of media, and more success in the industry.

Matthew Kassorla is a rising sophomore in the College of Arts and Sciences. He can be reached at [email protected]