With many studio films being bumped to 2021 and 2022 amid the pandemic, agents are looking for other ways to get their clients paid
While theater closures are moving blockbuster release dates to 2021 and 2022, many Hollywood agents are encouraging studios and clients to instead sell their films to the streamers, multiple insiders told TheWrap.
“Agencies are pushing to sell to streamers because they can immediately get cash and their commissions rather than wait for it,” one studio insider told TheWrap. “The agencies are in such a crappy position that they are trying to push us to sell product — you are getting a premium if you are getting paid upfront.”
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Entertainment attorney Schuyler Moore at Greenberg Glusker agreed that the move toward streaming has accelerated this year. “Everybody’s going to the streamers, agents in particular. Previously, the stars and big directors looked down at the streamers almost like television, but that barrier has been broken, in part with ‘The Irishman,'” he said, referencing the Martin Scorsese drama that had a small theatrical run last year prior to its Netflix debut. “Everyone is lining up to sell to streamers. You gotta sell to streamers — everybody has to now.”
Financial considerations play a big factor in the new push. An agent who preferred to stay anonymous confirmed that “agents are steering their clients toward streaming,” mainly because “streamers overpay currently.”
“It’s just them being an advocate for their client and their client’s films since so many are now sort of stuck in limbo,” the agent said. “If the films were negotiated to be theatrical releases, when the studio has to retroactively go back to the agents to re-negotiate their client’s deals, inevitably an agent is going to get involved in the sale or reassignment of the film to PVOD or a streamer.”
For some films that had been planning a now-delayed theatrical release, rerouting to a streaming service may be a viable option. The release schedules for “2021 and 2022 are so crowded that if there’s a middle-of-the-road movie where they can take the cash now, they are going to do it,” the studio executive said.
However, one agency insider denied the idea that agents were pushing the films to streamers for cash flow — instead blaming the push on the influx of new streaming platforms this year that are all looking for content, from HBO Max to Peacock to even the short-lived Quibi at the start of the pandemic.
“There are more streamers and, therefore, more streaming projects on a nearly weekly basis,” the agency insider said. “The notion that we’re driving projects there in a kind of cash crunch is simply not factually accurate — there are simply more services and more projects out there.”
Another agency insider said the push to streaming is motivated at least in part in keeping their clients relevant when so many projects have been postponed indefinitely. “It’s more about being smart for the sake of your client… which, of course, ultimately puts more money into your pocket.”
Several noted that agents don’t have much say in how a studio handles its film slate regardless of how much campaigning agents may do. “I don’t know how much of a choice an agency really has in it,” one agent said. “Streamers are almost always going to be the buyer (and often overpay) because studios are simply no longer interested in buying and releasing those kinds of films theatrically. A studio renegotiating a contract on a theatrical film into a PVOD or streamer film, the agent will obviously get involved there again. So it’s more reacting to the circumstances. It’s all a reflection of the large changes in the theatrical business.”
In the past, top talent and their teams have preferred theatrical releases due to the backend deals based on box office performance. But with many movie theaters shut down and a glut of studio product piling up for whenever cinemas reopen, streamers are looking more attractive. “It depends on the level of the stars they are working with,” the studio insider said. With production slowly ramping up again, he said, “A lot of the actors still want to work but it’s a different scenario with A-list talent, who can afford to wait.”
Holding out for movie theaters to reopen sometime next year may not pay off. “Even before COVID-19, theatrical was very dicey if you weren’t a Marvel, DC, ‘Fast & Furious,’ etc. type of film,” the agent said.
In that environment, the appeal of streamers is clear: They pay more money up front, and they have the ability to release product now. According to insiders, the streamers license the films for five to 10 years at cost plus, meaning they usually cover the production cost plus an additional 15-30% of the budget as a cash payment, given that streamers don’t give back-end deals. One insider told TheWrap that the streamers have been paying between 20-30% above budget to give the studio some profit margin.
Even Hollywood studios that have been up in arms about streamers or day-and-date releasing are being forced to rethink their strategies, with Disney and Warner Bros. releasing tentpoles like “Mulan” and “Wonder Woman 1984” directly on their companies’ streaming services the same they open in a notably smaller, limited-capacity number of theaters.
Other studios without their own streaming services have sought quick cash from offloading titles. Paramount sold Aaron Sorkin’s “The Trial of the Chicago 7” to Netflix for a reported $56 million, as well as “The Lovebirds” in the high-$20 million/low-$30 million range. Amazon Studios paid Paramount a reported $125 million for Eddie Murphy’s “Coming 2 America.” Sony told the distribution rights of Tom Hanks’ “Greyhound” to Apple TV+, and STX offloaded “My Spy” to Amazon.
“We’re in this pendulum swing where Hollywood does what it does, where right now the only thing everyone is thinking about is streaming,” the studio insider explained. “Major distributors are all in on streaming, saying ‘We are restructuring our business to go into streaming and are prepping for a streaming revolution. The industry is following suit — it’s what agents do — chasing the money.”
Many of the agencies have faced a financial squeeze since the pandemic, with layoffs and furloughs at virtually every top agency. In addition, CAA and WGA continue to operate without any writer clients (or their commissions) due to an ongoing legal dispute with the Writers Guild of America over packaging fees.
Two Hollywood managers told TheWrap that selling films to streamers is a smart strategy since the start of the pandemic. “Even without COVID, streaming services get a lot of eyeballs,” the manager said.
Streaming releases also minimize the risks for talent in other ways. “If your film doesn’t perform well on a streamer, it doesn’t ‘mean as much’ as if the same film didn’t perform in theaters,” the manager said. “If a film flops in theaters it could ruin a director’s career; whereas, on streaming people don’t pay as much attention and streamers pay really well.”