High-Budget SVOD Residuals

Residuals for High-Budget Subscription Video on Demand (HBSVOD) Programs

Residuals are compensation paid for the reuse of a credited writer’s work. When you receive credit on produced Guild-covered material, you are entitled to compensation if the material is reused. If you have written an episode of a high-budget series, or an original feature for a subscription streaming service, you might be wondering about your residuals.

As a result of the 2007 strike, WGA members won jurisdiction over writing for the Internet. This has proven to be an important victory that has continued to pay off for members. Subscription streaming services are on track to become the largest employment market for writers in the near future, and the Guild continues to make improvements to these residuals in each MBA.

So, what do the residuals look like for High-Budget Subscription Video on Demand (HBSVOD)? A few basic factors determine the residuals for programs written under the 2017 and 2020 MBAs.

HBSVOD residuals are “fixed” residuals, like a network rerun or a run on basic cable. This means the amounts are set in the MBA, while revenue-based residuals are percentages of program revenue (e.g., license fees). Because there is a broad range in the number of subscribers to each SVOD service, the formula for calculating HBSVOD residuals incorporates the size of the streaming service by using subscriber tiers. The residuals are paid annually, and the annual amounts decline over time as the program ages. If the SVOD service operates internationally, like Netflix, Amazon and Disney+, there is an additional annual payment for international reuse.

Broadly speaking, the residuals are determined by the length of the program (Residual Base), the size of the service when the program was written (Subscriber Factor), and the exhibition year (Exhibition Year %).

Now let’s look at the formulas for calculating these residuals.

Residual Base x Subscriber Factor x Exhibition Year %

Program Length – Residual Bases

The first factor in the HBSVOD residual formula is the residual base. The amounts were fixed for programs written under the 2017 MBA at one rate for the entire contract period. For programs covered by the 2020 MBA, there is one rate for writing between May 2, 2020 and May 1, 2021, and an increased rate for writing that occurs in the second and third year of the 2020 MBA. The table below provides the amounts for different program lengths and credits. (Please see The Caveats below for information about exceptions to these rates.)

Subscriber Tiers

The second factor is the size of the SVOD service, classified by 5 subscriber tiers. As the SVOD service increases in size, the residual amounts increase.

The subscriber tier is determined annually on July 1, and the tier applies for 12 months. For example, Disney+ was in the 20-45 million subscriber tier on July 1, 2020. While the service continues to grow and has more than 45 million subscribers now, its subscriber tier will not change until July 1, 2021. The subscriber tier at the time the program is written applies to the residual calculations in subsequent years, even if the service grows in size.

Exhibition Year Percentage Payments

Payment of initial compensation covers 90 days of use on a streaming platform with 1 million domestic subscribers or more. For services with fewer than 1 million domestic subscribers, the payment covers one year of use. After this initial window, residuals are due for each 12-month period of availability on the service. In the 2020 MBA, the Guild negotiated increased payments for the first three years of reuse, reflected in the table below.

(Please see The Caveats below for important information about feature-length programs.)

Foreign Reuse

Finally, there is also a residual payment for foreign SVOD reuse if the service operates globally (e.g., Netflix, Amazon and Disney+). The foreign payment is a percentage of the domestic payment. For programs written under the 2017 MBA, that percentage starts at 35% and declines over time. For programs written under the 2020 MBA, the annual percentage stays at 35% of the domestic payment for each year.

Examples

Netflix One-Hour Episode

If you wrote a one-hour episode on a Netflix series under the 2017 MBA, your first-year residual would be calculated using $25,663 as the base for story & teleplay, 150% for the subscriber factor, and 35% for the first year.

$25,663 x 150% x 35% = $13,473

For the international reuse, the writer of the Netflix one-hour episode would receive $4,715 for the foreign reuse for the first year.

$13,473 x 35% = $4,715

Amazon Feature

If you wrote a 100-minute feature for Amazon under the 2017 MBA, your second-year residual would be calculated using $50,541 as the residual base for story & teleplay, 100% for the subscriber factor and 30% for the second year.

$50,541 x 100% x 30% = 15,162

For the international reuse, the writer of the Amazon feature would receive $5,306 for the foreign reuse in the second year.

$15,162 x 35% = $5,306

(Please see The Caveats below for important information about feature-length programs.)

These amounts remain far too low for the global reuse of WGA-covered programming on these massive services, and the Guild will continue to work to improve these residuals so that writers share in the global success of the programming they create.

The Caveats

Exempted Programs

Beginning with the 2014 MBA, the companies limited the application of improved HBSVOD residuals to new series licensed and written during the term of the 2014 MBA. If a program had already been licensed or written prior to the 2014 MBA, it did not benefit from the improvements, even for new seasons that were written after the 2014 MBA took effect. This approach continued under the 2017 MBA. If you wrote on a program during the 2017 MBA that was covered by the prior terms, consult the 2014 MBA HBSVOD explainer.

During the second year of the 2020 MBA, this exemption from improved terms will be eliminated for most HBSVOD series that were licensed prior to the 2020 MBA. Specifically, seasons of these exempt HBSVOD series that begin filming in July of 2021 will benefit from the improved residuals negotiated in the 2020 MBA. However, HBSVOD series that were originally licensed during the 2014 MBA contract period will continue to be exempt from the improved residuals, and writers on those programs will be paid under the residual formula in the 2014 MBA. If you are working on an ongoing HBSVOD series and have questions about how these changes affect your series, please contact the Contracts Department.

Low-Budget SVOD Programs

The fixed residual SVOD payments only apply to high-budget programs. If your program was below the budget break, the residual is 1.2% of the license fee after 26 weeks of use. The budget breaks for half-hour and one-hour episodes were lowered in the 2020 MBA.

Film that are classified as “made for the theatrical market”

If you have written a feature for a studio with a streaming platform, the project may be classified as a theatrical and the residuals owed to you are 1.2% of a license fee for the SVOD reuse, rather than the fixed residuals outlined here. The WGA is currently engaged in an arbitration with Netflix regarding how it imputes license fees for feature films the company produces and distributes. As a result, the residual amounts you have received may not reflect what the Guild believes the company is required to pay under the MBA. If you have additional questions, please contact the Legal Department.

Wondering about your specific HBSVOD residuals? You can always use your member account to track your residual payments or contact the Residuals Administrator at (212) 767-7814, or via email.