This is one thing that fascinates me about the streaming model.
At some point it boils down to {cost per customer} vs {revenue per customer}.
However, because of residuals, {cost per customer} doesn't scale down as user count scales up. You ammortize the non-residual chunk of production, but that's a weird equation that likely drives the incentives we see playing out.
I'd assume residuals are lower / non-existent on the much-bemoaned formulaic Netflix fodder movies? Hence why they keep getting stuffed in services.
> I'd assume residuals are lower / non-existent on the much-bemoaned formulaic Netflix fodder movies? Hence why they keep getting stuffed in services.
As I understand it, the residuals are for things beyond the original contract. So if you have a broadcast show, that gets paid out. Then it goes to syndication - residuals get paid. Then it goes to streaming - residuals get paid.
> So shows originally produced for broadcast television aren’t an issue. When “Friends,” which was originally an NBC sitcom, generates $1 billion dollars on streaming platforms, the five leads each earn 2%, or $20 million apiece. But a show like “Stranger Things” – produced and owned by Netflix – never goes to a secondary market as long as it is aired only on Netflix, so the stars earn only their original pay.
> The problem, then, comes from the fact that the existing residual model, per the expiring SAG-AFTRA contract, doesn’t take streaming into account.
> In the streaming era, all new shows produced by streaming platforms are concurrently reruns and original runs. Actors want 2% of streaming revenue generated by the show or film to replace this line of income.
At some point it boils down to {cost per customer} vs {revenue per customer}.
However, because of residuals, {cost per customer} doesn't scale down as user count scales up. You ammortize the non-residual chunk of production, but that's a weird equation that likely drives the incentives we see playing out.
I'd assume residuals are lower / non-existent on the much-bemoaned formulaic Netflix fodder movies? Hence why they keep getting stuffed in services.