Videoage International October 2019

6 World October 2019 V I D E O A G E ted profit payment on top of it starting with the first episode, but producers give up the rights to any backend revenue. Disney would give producers a share of profits starting in the second season of a series and determine the value of each show by basing its estimates on the financial performance of other series from the past few years. The participants would receive negotiated points in the series based on that figure, starting in the second season. Producers will also be eligible for a series of bonus payments based on a show’s success and endurance. Producers would see the value of their stakes grow each season a show is renewed. They would also be eligible for pre-negotiated bonus payments for Emmy and Golden Globe nominations, and a show’s Nielsen rankings. Compensation for revenue generated through music pu- blishing, merchandising, DVD purchases, and video down-lo- ads would also be paid from a bonus pool. A program’s popu- larity on Disney Plus and Hulu would be equally rewarded. A major benefit for Disney is that the company would no longer have to determine fair market value before putting one of the series it owns on Disney Plus. It’s a way to solve the problem NBCUniversal recently faced when it had to outbid Netflix to get the rights for some of its own properties, including The Office , to run on its own upcoming streaming service. NBCUni had to agree to pay itself $100 million annually in a five-year deal to get the streaming rights to The Office . Netflix sought a shorter-term deal at $90 million a year to retain it. The series, which ran on NBC for eight years, was the streaming service’s most-watched program in 2018 according to Nielsen. When NBCUniversal pays itself for this program from its own studio, a good amount of the money will go to the show’s profit participants, as it would if the show were to be licensed to cable networks or local TV stations. Under Disney’s plan, that would not happen with futu- re series, as the company will own 100 percent of them in per- petuity. Disney is also looking to avoid the litigation that can occur with profit participants, since the company has to make a good-faith effort to determine the best value of a series before selling it to itself for syndication or streaming, which can include making programs available to outside parties. A fter the May 2019 front cover story in VideoAge (“Blurred Windows: The Devolution of IP Rights”), the traditional business model of residuals and backend revenues has officially changed, with Disney being the company to transform how TV show creators are compensated for their work. As of this past summer, Disney has been asking producers and other profit participants in its shows to accept a new formula offering profits earlier in exchange for renouncing any future licensing revenue. Disney wants its payment system in place as it approaches the launch of its streaming service, Disney Plus, which is scheduled for next month. Although Netflix and Amazon have been making such deals for their streaming services for the past few years, Disney would be the first U.S. studio to require them for all new TV shows. In effect, this would mean that Disney would control all licensing of the series to domestic syndication, streaming services, and foreign TV outlets, essentially buying out whatever share of profits are generated by those contents. Amazon offers profit participation in the third season of a show based on a value deter- mined by the company. Netflix pays creators for the cost of production and adds a negotia- Backend andResidualsAre Things of a Linear Past (Continued on Page 8) @FILMRISE @FILMRISETV SALES@FILMRISE.COM @WEAREFILMRISE Visit Us At The Buyers-VIP Lounge