The Streaming Effect in the new Hollywood Income Flows

The fascinating Hollywood world has been shocked by an event which is definitely going to change contracts between stars and studios. Everything started at the end of July with the decision of the famous American actress Scarlett Johansson to sue The Walt Disney Company after the questionable choice the multinational company made by releasing the new “Black Widow” movie on their streaming platform Disney+.

The reason for this action was because of what was mentioned in the initial contract between the actress, who is the protagonist of the movie, and Disney. In fact, Ms. Johansson, who received an upfront salary of $20 million for starring in the movie, affirmed she was promised by the Disney’s Marvel Entertainment that “Black Widow” would be released exclusively in at least 1500 theatres for almost 90-120 days before it would be streamed on Disney+. The multinational company’s decision to release the film on the streaming platform before the due date brought a significant reduction in Ms. Johansson’s earnings, which was also based on the box office performance of the film. Sources who knew the terms of the contract estimated that she was going to lose up to $50 million.

After the announcement of the lawsuit, the two sides broke out into ferocious attacks. A statement made by the company settled in Burbank, California, said “the lawsuit is especially sad and distressing in its callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic”. The plaintiff’s lawyers promptly responded. “It’s no secret that Disney is releasing films like Black Widow directly onto Disney+ to increase subscribers and thereby boost the company’s stock price — and that it’s hiding behind COVID-19 as a pretext to do so. But ignoring the contracts of the artists responsible for the success of its films in furtherance of this short-sighted strategy violates their rights and we look forward to proving as much in court”, declared Johansson’s attorney John Berlinski to “People”.

These harsh words apparently signalled a break in relations between the star and the company. To better understand the size of this event, The Washington Post referred to it as the “Hollywood’s biggest battle in decades”. But the reality is that when there are disputes because of huge amounts of money, most of the time everything can easily be solved with even more money. That’s precisely what happened a few months later. In fact, the latest developments have occurred in the past few days. On September 30th, the actress and Disney announced they had solved their dispute. According to CNN, the two parties have found a deal based on approximately 40 million dollars, but the real terms of the agreement were not disclosed. Peace was made, and both parties can’t wait to work together again. “I’m incredibly proud of the work we’ve done together over the years, I look forward to continuing our collaboration in years to come”, Ms. Johansson said.

And they all lived happily ever after, we could say. Nevertheless, this fight could be the promoter of an important turning point of the contracts between stars and studios. In the last years different multinational companies have invested millions in streaming platforms. Just to mention a few, Amazon’s Prime Video, Apple TV+, Netflix, Disney+, HBO Max. Regarding the last one, in December 2020 Warner Bros., the second-largest movie studio, announced all of its 2021 movies would be streamed on HBO Max. It’s no secret that these companies see streaming as the future of the film industry, as theatres are increasingly facing a profound audience crisis. The closing of cinemas as a consequence of the pandemic has certainly accelerated this process. Research from Conviva showed Americans spent 44% more time streaming video in the fourth quarter of 2020 than they did a year earlier, with an additional growth of 13% in 2021. More important data was given by the Motion Picture Association, which reported that the number of subscriptions to online video streaming services around the world reached 1.1 billion in 2020. To have a better idea of these numbers, take into account that Netflix registered a total of 203.7 million subscribers by the end of 2020, with an annual revenue amounting to almost $25 billion (+23.8%).

Because of this scenario, more actors are driven by the lawsuit between Scarlett Johansson and Disney to ask for a bigger share. It’s not difficult to foresee a new way of earning for stars, who wish to protect their interests in new contracts which won’t be based on ticket sales in movie theatres. A hypothesis that is being discussed is to pay a supplementary sum to the actors based on the number of views the movie reaches on the streaming platform. An additional hypothesis is to pay actors according to the number of new subscribers of the platform willing to see a certain movie. That would be an interesting proposal, although difficult to analyze. Do studios have a clear way to measure the success of streamed movies? Are they able to understand if subscribers sign up because they want to see that precise movie? Actually, it could be that studios already have instruments or algorithms capable of understanding this. The point is they have shown not to be really inclined to share data about their releases and how much money they make and how many people are watching them.

It is difficult to understand how the situation will really evolve. Hollywood is pervaded by the uncertainty for the future. What is certain is that the film industry is facing the biggest challenge in its history, and the final results can only be reflected from the inevitable changes and improvisations of these times.  

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