This summer’s biggest Hollywood attraction is a multimillion-dollar battle between two of the industry’s best-known players: Scarlett Johansson and Disney. Johansson sued Disney last week over its day-and-date release of her Marvel superhero film Black Widow, which put the movie on Disney Plus the same day it hit theaters, potentially depriving her of a huge box-office-infused paycheck. The aftermath has been chaotic, but it’s more importantly illuminated the myriad ways that streaming has forever changed the way we experience movies and the implications for the creatives and talent who make them.
Movie contracts have traditionally been negotiated around box office results, with sizable bonuses tied to how well a film performed. This worked out well for both talent and studios. Studios saved a chunk of money up front and didn’t risk spending big on a flop, while actors, producers, and others involved in a film could look at box office results to see exactly what their production was worth and get paid accordingly.
But with the shift to streaming, things have had to change. Actors and producers working with a streamer like Netflix are typically paid a set fee, an industry attorney who negotiates contracts for top-level talent told The Verge. (The attorney asked not to be named so as to speak freely about the topic.) If they’re lucky enough to have significant leverage, they could also potentially secure a bonus premium fee that’s a contractual dollar amount paid out over months or quarters. But it’s not performance-based like box office bonuses are. Netflix often pays out this prenegotiated sum in eight quarterly installments following a title’s release, the attorney said, while Apple tends to pay out a little quicker over 12 months.
Because the space is changing so quickly, part of this attorney’s role in contract negotiations now is to “read the tea leaves and project where the deals are going to go.”
Lawyers have to “read the tea leaves and project where the deals are going to go”
The old way of negotiating talent earnings has changed rapidly. According to Johansson’s complaint, terms of her Black Widow release were initially finalized in 2017 — early enough that Disney Plus hadn’t been announced, and Johansson’s team evidently didn’t think it was necessary to negotiate terms around streaming. Her contract specified Black Widow would debut with a “wide theatrical release,” but that it would be exclusively theatrical appears to have been only an understanding.
While actors know now that they need to negotiate terms for streaming, determining their worth is more difficult than simply looking to box office receipts. Streaming services hold their performance data extremely close to the chest, and they’re reluctant to share specifics about engagement and earnings on specific titles. Data that is shared is often opaque, obscured, or lacking context for how a title’s success (or failure) was measured by respective streamers.
“I don’t see Netflix wanting to share how much of their subscriber base is growing and what their viewership is any time soon,” the attorney said. “But we would like to see it.”
This is one reason why industry analysts who spoke with The Verge expressed a need for greater transparency by not just Disney but all streamers about performance data of titles on their platforms. Without it, it’s difficult for talent to advocate for themselves in negotiations in a swiftly evolving streaming landscape, argued Karie Bible, a media analyst with Exhibitor Relations Co. who spoke with The Verge by phone.
“The streamers are, for the most part, pretty darned nontransparent about numbers, about breakdowns, about demographics,” Bible said, adding that this information is not only crucial for analysts but agents, managers, and lawyers, too, who have traditionally negotiated based on box office performance. What this lack of transparency by streamers can lead to is not only mistrust, but possibly even more of what Bible described as “creative accounting” by companies who aren’t forthright during contract negotiations. And that could potentially mean lost earnings for talent.
“The streamers are, for the most part, pretty darned nontransparent about numbers, about breakdowns, about demographics”
Another thing to consider is that each individual streamer’s metrics for success are, by and large, unclear. Box office numbers offer a clear picture of how a movie performed relative to its budget and projected ticket sales. But with streaming, none of us really know what a win looks like — huge viewership numbers, new signups, repeat views — short of the company telling us that a movie was one.
“I think we have to understand this lawsuit in the context of the redefined success metrics for any movie in the market today,” Daniel Loria, SVP of content strategy and editorial director at Boxoffice Pro, said by phone. “Unfortunately, we are all in the dark as to what that success means in the streaming era — not just the COVID era — but the streaming as a whole.”
Like Bible, Loria added that it’s likely frustrating for people in the entertainment industry who stand to benefit from streamer-produced titles but are not getting enough transparency around data and seemingly arbitrarily concocted metrics for success, which can vary by company and service. That could lead to top-name talent thinking twice about engaging in these types of agreements, or at the very least demanding clauses that protect their earnings in the event that a film’s release rollout is changed by a streaming-adjacent studio.
“It seems right now like every studio is playing by a different set of rules and different metrics on what is financially successful and what isn’t”
“If the industry wants to redefine the metrics of success for a movie, it needs to be on the same page on what that definition is,” Loria said. “And it seems right now like every studio is playing by a different set of rules and different metrics on what is financially successful and what isn’t.”
Now, negotiations are not going to operate the same way for every actor. Streaming services are willing to shell out more for talent if they believe the production is likely to drive subscriptions to the service, the Hollywood attorney told The Verge. That in itself presents a lot of opportunity for talent willing to join a production that may be a straight-to-streaming release, as we’ve seen play out on services like Netflix and Apple TV Plus.
“I think in our business, high-end talent has always had leverage and will continue to have leverage,” the attorney said. At the same time, the attorney pointed to a “maelstrom” of two significant influences, COVID-19 and a new streaming era, that has complicated contracts negotiated prior to either.
Whether Johansson’s lawsuit is settled out of court is less important than what we’ve learned from Disney’s response to it: streaming services are being intentionally obtuse about how owning every single element of production, including releases, and an insatiable appetite for streaming influence is impacting the entertainment industry. No one’s sure what success looks like today, and that’s made knowing who’s winning and who’s losing hard to size up. Short of streamers making that data more transparent and available, the people who make the stuff we watch are walking into negotiations blind. And ultimately, what’s bad for streaming is bad for viewers.