- [Paparazzi] Scarlett, hold that smile for us.
- [Narrator] Actors are looking
to renegotiate their contracts
in big budget movies.
- Scarlett Johansson, the star
of Disney's latest Marvel movie, "Black Widow,"
has filed a lawsuit today
in Los Angeles Superior Court against Disney.
- [Narrator] Traditional movie contracts
for A list talent include sizable upfront payments
and a lucrative backend deal based mostly
on box office ticket sales.
But with more films going straight
to streaming platforms,
actors are now looking for a piece
of the streaming profits.
- The movie wouldn't exist without actors,
and especially actors of certain stature
and with certain names.
They drive people to those theaters
or they drive people to download that subscription service,
and I do believe that they should get a portion of that.
- [Narrator] Paying stars a bigger piece
of digital sales would upend
the traditional pay structure for talent.
And for some, it could lead to tens of millions
of dollars in residual pay.
Money that agents and actors say
is now being left on the table.
Here's a look at how the Scarlett Johansson lawsuit
against Disney could be a catalyst
that changes the way Hollywood stars get paid.
(paparazzi screaming)
To understand what's at stake with actors,
you have to understand how their pay
is tied to a film's distribution cycle.
- There are so many unique and creative ways
for actors and performers
to make additional compensation
for their participation in films.
- [Narrator] Natasha Matallana,
who's been representing actors for over 15 years,
says depending on the contract,
backend bonuses in the long run
can be more lucrative for actors
than an upfront payment.
- Some of that compensation
is creatively carved out
by way of calling it a production fee
or a marketing fee or backend points.
- [Narrator] Those bonuses are tied
to how well the film does
at each point of the distribution cycle.
Traditionally, that cycle looks like this.
Feature films start their journey
with a theatrical release
that can last anywhere from a few weeks
to a few months, depending on how well it does
in the box office.
At this stage, talent contracts for actors
can include a cut of the opening box office sales.
After its run in the theaters,
a film would then make its way onto DVD or pay per view.
Depending on their contract,
an actor might make a cut of that as well.
About six months after that,
the title would become available
on streaming services, like Disney+ or Hulu.
This gives talent another opportunity to cash in.
This time with licensing deals
with various streaming content providers.
Eventually, if a film was well received,
it could also end up syndicated on television.
Syndicated films continue to make money
for studios and talent,
as long as the broadcaster continues to license
and air the film.
So that's what it looked like before.
Here's what it's starting to look like today.
Studios like Disney and Warner Media
are releasing films both in theaters for cinema goers,
and online for the at-home audience
at the same time.
Viewers who watch in theaters
pay the normal price per ticket
for admission, and those who watch at home,
might pay twice,
once for a monthly subscription
and depending on the streaming service,
again with a surcharge for early access to the film.
Unlike box office, retail DVD and licensing,
streaming surcharges and subscription fees
are usually not split with the talent.
Depending on the actor's contract,
they many still retain their backend residuals
for things like DVD sales, foreign sales
and pay per views.
But those have always been far less lucrative compared
to box office bonuses.
With direct to streaming,
studios have found a promising solution
for poor box office sales.
Actors and agents argue
that same-day streaming is in direct competition
with the theatrical release
and they're taking a huge loss in backend residuals.
- Well, Disney says they made about $60 million
just from the digital side of that
when they released "Black Widow."
- [Narrator] Dan Gallagher, who's been following the rise
in popularity of streaming platforms
for The Wall Street Journal,
says Disney's stockholders
really wanted to see them invest in the streaming future.
- When you put something out like "Black Widow"
where people have a choice on the day of,
there's always gonna be some number
that choose that convenience.
So it really can't help but to cannibalize some
of that theatrical return.
- [Narrator] At least two million households
purchased the $30 early access stream
on the film's opening weekend.
Johansson's lawsuit argues that her contract
with Disney's Marvel Entertainment
guaranteed an exclusive theatrical release,
and her salary was tied to the box office performance
of the film.
However, the film was released in theaters
and on Disney+ at the same time,
a decision that a person familiar with the details
of her contract said would cost her more than $50 million.
Disney said it fully compiled with Johansson's contract
and that the release of "Black Widow"
on Disney+ has significantly enhanced the actor's ability
to earn additional compensation.
Digital film releases are happening more and more.
According to Reelgood,
straight-to-video on-demand movie premieres
have more than tripled in Q4 year over year.
In 2020, 228 film titles
went straight to subscription videos on demand.
The pandemic played a large part
in accelerating the shift to premiering films online
but that option was already in motion
before theaters began to close.
- I definitely think that this is a path
that perhaps we were always headed down.
I just think that it might have been a couple
of years down the road,
and now because of COVID, it made it go fast.
- [Narrator] So what are contracts going
to look like moving forward?
Matallana says that actors will need
to negotiate contracts
that focus far less on box office ticket sales,
and A list actors will likely try to negotiate a cut
of any surcharge fees
for early access to their new films.
Actors with enough star power
may even be entitled to revenue
from new subscribers during a film's release.
- 2020 was a very ideal environment
for streaming because people didn't have a lot of options.
In a world that people have more entertainment options,
it's gonna normalize to something.
I think bigger than it was prior to the pandemic.
- [Narrator] Streaming new movies at home
is convenient for viewers,
and for streaming platforms, very profitable.
Agents and actors know this,
and experts say that moving forward,
they'll start looking for new
and creative ways to negotiate their way
into contracts that cut themselves in
on the streaming profits.