United States: Blockbuster DGA-AMPTP Deal Dramatically Increases Residuals for Streaming Entertainment and Signals Eclipse of Traditional Television Consumption

Conrad Wilton writes:

The Directors Guild of America (DGA) offered a sizable gift to its nearly 16,000 members this holiday season, announcing a three-year blockbuster deal with the Alliance of Motion Picture and Television Producers (AMPTP) which, if ratified by the membership, would more than triple residuals for directors creating original content for on-demand streaming services like Netflix, Amazon, and Hulu.  The deal would also boost wages and increase employer contributions to the guild's pension plan.

Although the deal requires on-demand video streaming services and affiliated production companies to dig considerably deeper into their pocketbooks, the contract signals another victory for this budding industry at the expense of traditional cable, satellite and live programming.  A Deloitte study published in 2015 found about 70% of American millennials stream television programs for the convenience of on-demand consumption while less than 35% of them watch live television at all.  Moreover, only 45% of all Americans said they watched live television.  With more eyes turning from traditional television to on-demand streaming, DGA naturally sought to keep its members on the forefront of this sea change in media consumption.

"Whereas three years of reuse of original content on a high-subscriber subscription video on demand (SVOD) platform would yield less than $15,000 [before the deal], that same three years of reuse more than triples to $50,000 under this new contract," said DGA Negotiations Co-Chair Michael Apted in an interview for Variety.  "That's a real, measurable, and meaningful increase that goes a long way toward addressing how people make and consume television content these days."  The new deal also boosts wages 2.5% in the first year and 3% in the second and third years as well increasing employer pension contributions one-half percent from 5.5% to 6%.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.