How the Writers Guild’s New Streaming Residual Will Work

The Writers Guild of America‘s tentative agreement with studios and streamers includes several firsts for the union, including protections against artificial intelligence encroaching on writers’ work and guarantees on minimum staffing levels for many series. It also can cut writers in on the success of streaming shows, something that’s never happened before.

The success-based residual will pay writers of streaming series and movies a bonus if the equivalent of 20 percent or more of a streaming service’s U.S. subscribers watch it within three months of release. It won’t be an easy threshold to reach, based on the limited viewing data on streaming programming that’s publicly available, but it’s not impossible, either.

Here’s how the new residual will work.

The Basics

The WGA’s agreement with the Alliance of Motion Picture and Television Producers enshrines the recent definition of a streaming “view” as its measure of success. That equation — total viewing time of a movie or season of a show divided by its running time — is the basis for Netflix’s weekly top 10 charts and has been used selectively by other streamers, notably Disney+ in recent weeks, to tout their own successes.

The number of views over 90 days is then divided by the number of domestic subscribers a streaming service has (as of July 1 of that year). If the result — what the guild calls the series or movie’s “performance metric” — is 0.2 (20 percent) or higher, then writers get a 50 percent bonus of the fixed residual for “high-budget” programming on SVOD platforms. The bonus is based on fixed residuals for both domestic and foreign markets, in cases where streaming services pay the latter.

The new residual will be applied to any high-budget SVOD series and movie that premieres after Jan. 1, 2024, regardless of when it was ordered or produced.

The Data

The AMPTP initially outright rejected the WGA’s proposal for a viewership-based residual, and in its Aug. 11 counteroffer, only agreed to offer the union confidential quarterly reports to “enable the WGA to develop proposals to restructure the current SVOD residual regime in the future.” Securing the view-based bonus was a win for the guild.

“We said from the very beginning that we needed to address all of these existential problems. We listed a whole bunch of them, but we said that we were open to conversations about the solutions within limits, and we were,” WGA negotiating committee co-chair Chris Keyser told The Hollywood Reporter. “So for example, would we have wanted an even greater bonus in streaming than we got? Of course we would have. And in our proposal, we asked for more, but it became a conversation about numbers and we settled on something in between, and that’s how negotiations work.”

The data used to determine those residuals, however, will still largely be kept from public view. In a letter to the guild’s chief negotiator, Ellen Stutzman, representatives from the major streamers laid out a process by which streaming data given to the WGA will be subject to strict confidentiality rules — to the extent that no more than six people “whose access to the Confidential Viewership Information is essential for the guild’s use of this information” will be able to see it. Those six people will also have to sign confidentiality agreements.

If the WGA suspects that companies are fudging their data, it can request an audit, but the auditor will likewise be required to sign a nondisclosure agreement related to the numbers.

Who’s Getting Paid?

The 20 percent threshold for the viewer-based residual isn’t going to apply to a ton of shows or films on streaming platforms. But had the WGA’s “performance metric” been in place this year, a number of titles — including runaway hits and a few solid but not world-beating performers — likely would have reached it.

In its memorandum of agreement, the WGA offers a hypothetical streaming series with a run time of 5 hours, 48 minutes that draws 70 million hours of viewing time over its first 90 days of release, on a streaming platform with 50 million domestic subscribers. The performance metric equation of (70 million hours/5.8 hour runtime)/50 million subscribers yields a quotient of 0.241, meaning the show’s view count is equivalent to 24.1 percent of subscribers. The writers of each episode of that show would get the bonus residual.

In the real world, breakout hits like Netflix’s The Night Agent and Queen Charlotte: A Bridgerton Story would easily qualify. Based on Nielsen streaming figures, both shows passed the 20 percent threshold for Netflix in the United States just by their time in the Nielsen top 10, without even considering weeks when they missed the top 10 cutoff but still racked up viewing time.

The Night Agent, for example, had 173.5 million hours of viewing over seven weeks in the Nielsen top 10; with a running time of eight hours and 11 minutes, that equates to about 21.2 million views in the United States. Netflix reported 75.57 million subscribers in the U.S. and Canada in the second quarter of 2023; dividing 21.2 by 75.57 equals 0.28, or 28 percent. (Since it includes Canada, the 75.57 million figure is obviously somewhat higher than the total for just the United States.)

A less massive but still popular show like Beef would likely make the 20 percent threshold, as well. The limited series recorded 70.95 million hours of viewing over five weeks in the Nielsen top 10. With a total running time of just under four hours, those five weeks put it at 16 percent in the performance metric calculation (again, using the combined U.S.-Canada subscriber tally for Netflix). That’s a little short of the residual threshold, but Beef could have easily made up the additional time — about 18.67 million hours of viewing — to cross the 20 percent line in the 45 days after it dropped off the Nielsen top 10.

Based on the limited public data available, it’s harder to predict whether shows with multiple seasons would reach the 20 percent cut. Nielsen aggregates all episodes of a series in its viewing time calculation, so it’s not possible to tell from that which individual seasons might reach the threshold (though streamers themselves surely have season-level data).

Several Netflix movies — including You People, The Mother, Murder Mystery 2 and Extraction 2 — would have reached the 20 percent threshold in their first 90 days as well, entitling their writers to the additional residual had it been in place this year.

The viewership residual could also have a potential side effect of reducing inflated running times: A series with a running time of, say, six and a half hours would need less total viewing time to reach the 20 percent line than one that’s eight hours long, and a 100-minute movie would get to the mark faster than a 120-minute one.