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Scarlett Johansson vs. Disney: Changing the Power Dynamic in Hollywood

Aug 20, 2021

Closing theaters, Americans hesitating to venture into public spaces, and a rapidly increasing number of streaming subscribers have movie studios and entertainment companies more inclined than ever to release new movies on streaming platforms. The past year saw many big-budget movies released straight to streaming services. Disney pioneered this strategy via excusive releases such as Luca and Mulan and theater and streaming hybrid releases of Cruella and Black Widow.

The most recent installment in the Marvel cinematic universe, Black Widow, had the most successful first weekend of any movie released since the start of the pandemic, bringing in $80 million in domestic ticket sales and $78 million in international sales. It didn’t just bring in sales through the box office, though. Black Widow was simultaneously released on Disney+, where subscribers could watch from the comfort of their homes for a cost of $29.99. This earned Disney an additional $60 million during the first weekend. By the second weekend, there was a 67% drop in sales, a much larger decrease than is typical for Marvel movies. As a result, Scarlett Johansson, Black Widow’s star, is now suing Disney. She claims that when Disney decided to sell the movie on Disney+ while it was still in theaters, it breached her contract and deprived her of compensation she would have earned through box office sales. She alleges $50 million in addition lost earnings due to the hybrid release.

Negotiating large deals based on ticket sales is the industry norm. Talent and creators receive a cut of the profits that come from the box office, payouts which are known as “backend.” Scarlett Johansson’s lawsuit alleges her contract stated the film would have a theatrical release, and the hybrid release strategy led to a reduction in her backend compensation. Disney’s statement on the matter claims it “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 $20 million she has received to date."

Industry insiders’ opinions are split, with some saying that the studios are more than fair to talent. Others are rallying behind Johansson, indicating the outcome of this lawsuit could provide a new standard for how compensation is written into contracts that involve a streaming component.

As strategy changes, studios and creators will need to come to a consensus and determine the standards going forward. Currently, most large studios create a release plan on a movie-to-movie basis. Since Disney currently owns the content for some of Hollywood’s biggest franchises, it appears to have the upper hand in these negotiations. Will talent ultimately have to accept whatever theater-to-streaming release schedule is determined to best suit the movie, regardless of how it affects their backend compensation? The outcome of this lawsuit could very well shape the future power relationship between big media companies and the talent who bring these movies to life.

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Richard Nachmias

Richard Nachmias is an Audit Partner and Partner-in-Charge of the firm's Sports and Entertainment Group. Rich has more than 25 years of experience providing services to companies in the media and technology industries.

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