That will make 216 writers from 139 productions of Netflix receive a large sum of money to compensate for the significantly lower residual payment they received from the company.
It should be noted that the WGA West and WGA East They are also seeking to obtain an additional $13.5 million in interest that the streaming giant generated from the late payment of these residual rights.
Why should Netflix pay so much money to its writers?
The issue here is that Netflix negotiated a very low residual payment with the Screen Actors Guild (SAG-AFTRA) and the Directors Guild of America (DGA) for the movie Bird Box.
In that agreement Netflix imposed, it was specified that payment for residual rights (royalty payments to a writer for his or her work) would be given only on the release of films in theaters and not on subsequent releases in other markets.
Regarding this the WGA West and WGA East they commented:
“When a theater is licensed or released in any other market, such as streaming, television or home video, the residuals must be paid for the revenue earned in those markets. The typical residual for the credited writer is 1.2% of the license fee paid to the producer for the right to show that film.”
Now, Netflix tried to force the WGA to accept the same agreement that they had established with the DGA and SGA-AFTRAhowever the Writers Guild rejected it and took the dispute to arbitration.
During the arbitration, the WGA West and WGA East showed that “when Netflix licensed comparable theatrical films from outside producers, it almost always paid a license fee that exceeded budget. The industry refers to this model as “cost plus.” The Guild argued that Netflix should apply this “cost-plus” model to its own films and charge over-budget license fees in order to pay for the residuals.
In this regard, the arbitrator ordered Netflix pay writers the same level of license fees as you pay for third-party titles. Which means that the ruling will apply to a total of 139 original feature films from Netflix.