How the Writers Guild’s New Streaming Residual Will Work

The Writers Guild of America’s tentative settlement with studios and streamers consists of a number of firsts for the union, together with protections in opposition to synthetic intelligence encroaching on writers’ work and ensures on minimal staffing ranges for a lot of collection. It can also minimize writers in on the success of streaming exhibits, one thing that’s by no means occurred earlier than.

The success-based residual can pay writers of streaming collection and films a bonus if the equal of 20 p.c or extra of a streaming service’s U.S. subscribers watch it inside three months of launch. It gained’t be a simple threshold to succeed in, based mostly on the restricted viewing knowledge on streaming programming that’s publicly accessible, but it surely’s not unattainable both.

Right here’s how the brand new residual will work.

The Fundamentals

The WGA’s settlement with the Alliance of Movement Image and Tv Producers enshrines the latest definition of a streaming “view” as its measure of success. That equation — complete viewing time of a film or season of a present divided by its operating time — is the premise for Netflix’s weekly prime 10 charts and has been used selectively by different streamers, notably Disney+ in latest weeks, to tout their very own successes.

The variety of views over 90 days is then divided by the variety of home subscribers a streaming service has (as of July 1 of that yr). If the consequence — what the guild calls the collection or film’s “efficiency metric” — is 0.2 (20 p.c) or larger, then writers get a 50 p.c bonus of the mounted residual for “excessive price range” programming on SVOD platforms. The bonus is predicated on mounted residuals for each home and international markets, in instances the place streaming providers pay the latter.

The brand new residual will likely be utilized to any excessive price range SVOD collection and film that premieres after Jan. 1, 2024, no matter when it was ordered or produced.

The Knowledge

The AMPTP initially outright rejected the WGA’s proposal for a viewership-based residual, and in its Aug. 11 counteroffer, solely agreed to supply the union confidential quarterly reviews to “allow the WGA to develop proposals to restructure the present SVOD residual regime sooner or later.” Securing the view-based bonus was a win for the guild.

“We stated from the very starting that we would have liked to deal with all of those existential issues. We listed an entire bunch of them, however we stated that we had been open to conversations concerning the options inside limits, and we had been,” WGA negotiating committee co-chair Chris Keyser instructed The Hollywood Reporter. “So for instance, would we’ve got needed a fair larger bonus in streaming than we received? After all we might have. And in our proposal, we requested for extra, but it surely grew to become a dialog about numbers and we settled on one thing in between, and that’s how negotiations work.”

The info used to find out these residuals, nonetheless, will nonetheless largely be stored from public view. In a letter to the guild’s chief negotiator, Ellen Stutzman, representatives from the main streamers laid out a course of by which streaming knowledge given to the WGA will likely be topic to strict confidentiality guidelines — to the extent that not more than six folks “whose entry to the Confidential Viewership Data is important for the guild’s use of this info” will be capable of see it. These six folks can even should signal confidentiality agreements.

If the WGA suspects that corporations are fudging their knowledge, it could possibly request an audit, however the auditor will likewise be required to signal a non-disclosure settlement associated to the numbers.

Who’s Getting Paid?

The 20 p.c threshold for the viewer-based residual isn’t going to use to a ton of exhibits or movies on streaming platforms. However had the WGA’s “efficiency metric” been in place this yr, plenty of titles — together with runaway hits and some stable however not world-beating performers — seemingly would have reached it.

In its memorandum of settlement, the WGA provides a hypothetical streaming collection with a run time of 5 hours, 48 minutes that pulls 70 million hours of viewing time over its first 90 days of launch, on a streaming platform with 50 million home subscribers. The efficiency metric equation of (70 million hours/5.8 hour runtime)/50 million subscribers yields a quotient of 0.241, that means the present’s view rely is equal to 24.1 p.c of subscribers. The writers of every episode of that present would get the bonus residual.

In the true world, breakout hits like Netflix’s The Evening Agent and Queen Charlotte: A Bridgerton Story would simply qualify. Based mostly on Nielsen streaming figures, each exhibits handed the 20 p.c threshold for Netflix in the USA simply by their time within the Nielsen prime 10, with out even contemplating weeks once they missed the highest 10 cutoff however nonetheless racked up viewing time.

The Evening Agent, for instance, had 173.5 million hours of viewing over seven weeks within the Nielsen prime 10; with a operating time of 8 hours and 11 minutes, that equates to about 21.2 million views in the USA. Netflix reported 75.57 million subscribers within the U.S. and Canada within the second quarter of 2023; dividing 21.2 by 75.57 equals 0.28, or 28 p.c. (Because it consists of Canada, the 75.57 million determine is clearly considerably larger than the whole for simply the USA.)

A much less huge however nonetheless in style present like Beef would seemingly make the 20 p.c threshold as effectively. The restricted collection recorded 70.95 million hours of viewing over 5 weeks within the Nielsen prime 10. With a complete operating time of slightly below 4 hours, these 5 weeks put it at 16 p.c within the efficiency metric calculation (once more, utilizing the mixed U.S.-Canada subscriber tally for Netflix). That’s slightly wanting the residual threshold, however Beef might have simply made up the extra time — about 18.67 million hours of viewing — to cross the 20 p.c line within the 45 days after it dropped off the Nielsen prime 10.

Based mostly on the restricted public knowledge accessible, it’s tougher to foretell whether or not exhibits with a number of seasons would attain the 20 p.c minimize. Nielsen aggregates all episodes of a collection in its viewing time calculation, so it’s not attainable to inform from that which particular person seasons may attain the brink (although streamers themselves absolutely have season-level knowledge).

A number of Netflix films — together with You Folks, The Mom, Homicide Thriller 2 and Extraction 2 — would have reached the 20 p.c threshold of their first 90 days as effectively, entitling their writers to the extra residual had it been in place this yr.

The viewership residual might even have a possible aspect impact of decreasing inflated operating instances: A collection with a operating time of, say, 6 1/2 hours would wish much less complete viewing time to succeed in the 20 p.c line than one which’s eight hours lengthy, and a 100-minute film would get to the mark quicker than a 120-minute one.