Hollywood’s shift to streaming is rewriting the script for stars’ big paydays

By Brian Lowry and Frank Pallotta, CNN

Like other changes to entertainment distribution through the years, the studio shift toward streaming — hastened by the unforeseen consequences of the pandemic — has Hollywood talent and their representatives demanding a different way to be paid.

Scarlett Johansson’s lawsuit against Disney over the simultaneous streaming release of “Black Widow” marks perhaps the most significant push back thus far, setting the stage for a significant battle that promises to rewrite the rules over how stars get paid.

While Johansson received an upfront salary for starring in the movie — $20 million, according to Disney’s response to the lawsuit — her complaint notes that making the film available via Disney+ enhanced the value of the streaming service but reduced box-office revenue, depriving her of “box office bonuses” that would be calculated based on what “Black Widow” earned in theaters.

And it follows other expressions of discontent during the past year, as top actors and directors have chafed against studios prioritizing streaming in a way that threatens the theatrical model, and the way that actors traditionally shared in revenue from major hits. Unlike box-office totals, it’s more difficult to cleanly measure that in relation to streaming-service subscriptions.

The lawsuit comes at a pivotal moment for Hollywood — as the industry faces a moment that asks how audiences watch entertainment in the future, and how those who create it be compensated.

“We’re in a bit of a transitional period where the contracts that were struck did not anticipate this type of change in strategy,” Michael Nathanson, a media analyst at MoffettNathanson, told CNN Business. “I would think going forward from this point on every new contract will have to include language that figures out a way to compensate the talent for the potential of a direct-to-video, a direct-to-streaming watch.”

A topsy turvy Hollywood

Disney is not alone in advancing this change, nor is Johansson the first star to be irked by the move to streaming.

Warner Bros. (like CNN, a unit of WarnerMedia) surprised talent by announcing plans to simultaneously release its entire 2021 movie slate on its streaming service, HBO Max. Paramount shifted several of its movies to streaming, including “Coming 2 America” and “Infinite,” with the Hollywood Reporter saying that the latter’s star, Mark Wahlberg, wasn’t warned about the change.

Other issues have popped up as studios shifted their major blockbusters to streaming as the pandemic continues. For example, Warner Bros. reportedly paid star Gal Gadot and director Patty Jenkins each more than $10 million as the studio released “Wonder Woman 1984” on streaming service HBO Max as well as theaters in December.

“It’s been a tumultuous year since theaters reopened, and with day-and-date obliterating release windows, and in some cases shattering them beyond repair, the state of Hollywood present and Hollywood future has never been more topsy- turvy,” Jeff Bock, a senior analyst at entertainment research firm Exhibitor Relations, told CNN Business.

Studios have argued that they need latitude to survive a changing business — a process seriously exacerbated and accelerated when the pandemic closed theaters in 2020 and virtually shut off entire streams of revenue.

Disney’s statement in response to Johansson’s lawsuit suggests that the company doesn’t intend to roll over in this fight. The company responded on Thursday saying that it has fully complied with her contract and that there is “no merit whatsoever to this filing.”

But historically, major players tend to reach some kind of accommodation.

The nature of the changes, however, have implications that go well beyond just top stars, and could affect the relationships between studios and the major guilds that represent actors, writers and directors.

Talent vs. Studios: a tale as old as time

The history of Hollywood shows that these kinds of disputes frequently wind up in court.

In 1943, actress Olivia de Havilland sued Warner Bros., arguing that her seven-year contract violated labor law and forced her to take roles that didn’t interest her. De Havilland won the case a year later after a hard-fought trial that upended the old studio system, establishing performers’ rights to become free agents.

The battlefield shifted to television in the 1990s, when the producers of “Home Improvement” and the producer and star of “The X-Files” sued Disney and Fox, respectively, for what they argued was self-dealing as studios became vertically integrated — or, put more simply production companies and networks were owned by the same entities. All of those cases were settled out of court.

Two decades later, questions about profits in such instances persist.

In 2019 Disney settled a subsequent lawsuit brought by the “Home Improvement” team, arguing that the studio shortchanged them on profits from syndication rights, for an undisclosed sum.

That same year the stars of “Bones,” David Boreanaz and Emily Deschanel, settled a lawsuit against Fox over profits from that series, after an arbitrator awarded the show’s producers and stars $178 million.

The problem, as studio executives have pivoted to prioritize streaming, is that it’s not always clear how to measure success: studios have been less than transparent about publicly sharing data that would indicate how much money they make from their releases and how many people are watching them.

Do subscribers sign up for Disney+ because they want to see “Black Widow,” given the array of content that’s available on the service? It’s hard to know precisely.

“As talent and a talent representative, how do you measure and how do you monetize success?” Nathanson said. “The metrics have to change… Box office is an easy metric. The data comes out. It’s really hard with streaming to actually know what’s a success or not.”

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