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Scarlett Johansson’s Disney lawsuit will change Hollywood, we just don’t know how

September 6, 2021, 7:00 AM UTC

Scarlett Johansson wasn’t the first star to gripe about potentially losing money over their movie debuting simultaneously on streaming and the big screen, but she was the first to take legal action over it. And until the talent and studios who own services like Disney+ and HBOMax find some middle ground where everyone makes money, she won’t be the last.

To quickly recap the situation, Johansson is suing Disney because, as she alleges, they broke a promise to hold off on streaming Black Widow, her standalone Marvel movie, until it had been in theaters for a certain period of time. That’s because her payout on the film was $20 million upfront then a series of bonuses that kicked in if and when the film hit certain box-office milestones. But when Disney, which owns Marvel, released it on its streaming services for a $30 fee on the same day it bowed in theaters, she alleges that they cost her up to $50 million in bonuses. 

Disney fired back, saying the suit was “sad and distressing in its callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic.” They added, “Disney has fully complied with Ms. Johansson’s contract and furthermore, the release of Black Widow on Disney+ with Premier Access has significantly enhanced her ability to earn additional compensation on top of the $20M she has received to date.”

Johansson has a point, given this response her lawyer received from Marvel’s chief counsel:

We totally understand Scarlett’s willingness to do the film and her whole deal is based on the premise that the film would be widely theatrically released like our other pictures. We understand that should the plan change we would need to discuss this with you and come to an understanding as the deal is based on a series of (very large) box office bonuses.

She’ll have a tougher time proving that she would have hit all of those box office numbers, given some theatergoers’ reticence to see films indoors despite the growing percentage of Americans who are vaccinated, and the lesser appeal of the Black Widow character compared to others in the Marvel Cinematic Universe such as Captain America and Spider-Man.

The general belief in Hollywood is that Johansson and Disney will settle the case, even after the studio tried to go the arbitration route, but the battle will influence how actors, especially A-listers, will negotiate their contracts when it comes to upfront salaries, theatrical releases, and how they might be compensated if a movie becomes a streaming blockbuster. Particularly when it comes to day-and-date releases—the practice of simultaneously putting a movie on streaming services and debuting it in the theater.

“This is a big deal,” says Matthew Belloni, former editor of The Hollywood Reporter and founding partner of Puck News. “It’s something that agents, managers, and lawyers in Hollywood are obsessed about.”

Studios’ self-dealing

One of the key issues in Johansson’s lawsuit is the fact that, aside from denying her box-office bonuses, the studio used this day-and-date option to boost its Disney+ streaming subscriber numbers. That benefits the executives and shareholders but doesn’t trickle down to the talent, not to mention the theaters that are showing the films. As Belloni puts it, “Wall Street values streaming subscribers. It doesn’t value box office.”

“It’s very much in Disney’s interest that the dollars come into Disney+ for three reasons,” says Jeffrey Cole, director of the Center for the Digital Future at the USC Annenberg School for Communication and Journalism. “One, they don’t share [money] with the exhibitors. Two, they don’t have to give money to the talent. And three, they build up Disney+ and the stock price goes up. It’s good for the company, and everybody benefits except the exhibitors and the talent.”

Because of that, studios like Disney, Paramount, and Warner, the owner of HBO Max, are happy enough to get more people signing up for their services even if it means sacrificing a traditional box office hits. Warner avoided some of the blowback by paying out millions to some of the stars of its day-and-date releases, notably giving huge bonuses to Wonder Woman 1984 star Gal Gadot and director Patty Jenkins and treating the film as if it were a theatrical hit. 

Unfortunately for most people on the creative side of the industry, that’s not going to be the case until new contract clauses are hashed out. Meanwhile, Disney’s decision to go in the opposite direction and attack Johansson’s character is now stoking already-simmering tensions between talent and studios with streaming properties.

“Disney’s thinly veiled attempts to deflect blame to Scarlett Johansson with sexist, threatening public statements only underscores the many issues that performers and other industry workers face as our industry shifts,” SAG-AFTRA President Gabrielle Carteris said in a statement to Fortune. “The transition to streaming will continue to leave entertainment industry workers vulnerable to opportunistic studios, streaming platforms, and production companies who exploit talent for their own gain rather than sharing in the success. This one-sided practice freezes workers out unless artists and their representatives join together with the union to stand up and fight back. Scarlett Johansson is setting a courageous precedent and we thank her.”

That leads to the big question: how will Hollywood stars be rewarded for their work when it’s a streaming success? 

Contract clauses, stock bonuses, or upfront pay?

Streaming services are notoriously tight-lipped when it comes to numbers. Disney touted the fact that Black Widow earned $60 million in its opening weekend, and $125 million to date, because of customers paying $30 to stream it, while Netflix has previously announced how many people streamed The Office or an Adam Sandler movie. But those statements aren’t independently verifiable, which has led many actors to ask for auditing rights in their contracts to determine how well their films did on streaming services. 

It’s something Jeff Bock, senior media analyst at Exhibitor Relations, believes might become more commonplace in contracts. “Maybe an auditor will come in or a contract will say, ‘Hey, we need this data, because we need to know what our client is worth.’ It makes it difficult to report on whether something’s a success or not because we don’t have the data like we used to with box-office. That’s becoming more difficult because it’s a truncated box office plus the streaming numbers. Sometimes they aren’t great and, outside of Disney, nobody’s released real streaming box office numbers yet.”

While Johansson’s lawsuit remains pending and agents and lawyers scramble to make sense of what will come as more people stay home for new movies, one thing is clear — nobody has yet to figure out how streaming compensation will work. 

“Obviously, this is a whole new ballgame for agents and managers, and everybody has to reset the scales,” Bock says. “How do we determine how much bonuses these actors and producers and directors get when it does go on streaming? Do we give them a part of an increase of subscribers? Going forward, it’s going to be difficult to negotiate big contracts with points with major studios.” 

The decline of theaters

The other looming issue for actors and other creatives is that box-office numbers are a thing of the past. Attendance numbers were already in decline before the pandemic, and with more access to streaming — not to mention the mobile-device viewing habits of younger people—it isn’t likely that movie lovers will turn out in droves for whichever movie debuts that weekend. 

“1946, in North America, we sold 4.3 billion movie tickets. 2019, the last real year [of theaters], the population had more than doubled, and to keep pace with 1946, you would have had to sell 9 billion movie tickets. We sold 1.2 billion,” says Cole. “My prediction before COVID was that 1.2 billion tickets was going to go down to 500 million.  I thought it was going to take 10 years, but the bottom line is the theatrical business is declining. No matter how it shakes out, there are going to be more movies going to streaming.”

For now, though, a theatrical release is still the goal for actors, directors, and other people involved in filmmaking—and it can be written into a contract, like Johansson’s team wanted. That could mean negotiating a 30- or 45-day theatrical window before a movie goes to streaming, but the old standard of 90 days is over. Disney is releasing its next Marvel title, Shang-Chi and the Legend of the Ten Rings, with a 45-day window, which CEO Bob Chapek referred to as “an interesting experiment for us,” signaling that won’t be the case for all of its releases. As Bock says, “Day and date is here to stay. It works with the right films and the right studios, and if you have the right platform to release it.”

For the talent, onscreen and off, the likelihood is that negotiations will start with a higher number than in the past, until streaming revenue deals based on popularity are sussed out.

“People are going to start asking for a lot more money upfront. ‘Do you what you want with the movie, just pay us up front as if it’s a big hit,’” Belloni says. “Netflix does that. Traditional studios haven’t done that, because they want to only have to pay out in success. They don’t want to have to pay out if it’s a flop. But they may have to start doing that.”

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