How Hollywood May Be Sabotaging Profits With New Push to Pay Talent Upfront | Charts

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Studios and streamers believe they’re saving money in the long run, but they could actually be hurting quality and the bottom line

Netflix Disney Hollywood Streaming Talent Compensation
The streaming era has largely eliminated the 'grand slam' talent paydays in Hollywood. (TheWrap)

Streaming studio executives believe they have gamed the system by locking talent into occasionally lucrative yet restrictive deals that pay talent substantially more upfront and hoard all the long-term benefit for the distributor. In actuality, this new system may wind up hurting creative quality and exposing studios to increased financial risk.

What was once a relatively transparent talent compensation calculation based on box office earnings or linear TV ratings has become a mathematical game of hide and seek. Amid the streaming boom, Hollywood has largely shifted away from backend compensation — where directors and key stars get a share of the revenues from the box office or from linear syndication and deals for streaming broadcast rights — in favor of more nebulous front-loaded payment for SVOD content.