Possible WGA strike looms over Q4
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The Who’s Robert Daltrey attended Universal and VH1’s Amazing Journey: The Story of the Who premiere event at the Paley Center for Media’s DocFest in New York on Oct. 30.
Disney hosted its Magical Blu-ray Tour Oct. 26-28 at Roosevelt Field in Garden City, N.Y. Sponsored by Panasonic, the tour gave consumers information about the high-definition format.
To celebrate the Oct. 30 DVD release of Spider-Man 3, Sony executives participated in several promotional activities in New York’s Times Square on Oct. 29, including the NASDAQ closing bell ceremony.
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Writers demand higher DVD residuals, among other issues
By Susanne Ault -- Video Business, 10/26/2007
OCT. 26 | As if there isn’t already enough to think about during this critical fourth quarter, the possibility of a Hollywood screenwriters strike is of real concern to studios and retailers.
The contract between the Writers Guild of America and the Alliance of Motion Picture and Television Producers is set to expire on Oct. 31, and both sides have been fiercely clashing on deal extension terms for many weeks.
The WGA is gunning more than ever to secure a bump in compensation for members’ work on DVD and in new media, following its failure to do so when the two sides last renegotiated the Guild’s contract with AMPTP in 2001 and 2004. AMPTP leadership has stressed that producers can’t concede any DVD revenue, because it is increasingly crucial to move projects out of deficit positions as film and TV production budgets rise.
“We will NOT increase residual payments for videocassette and DVD use, including electronic downloads,” AMPTP president David Counter said in a statement in mid-October.
WGA West assistant executive director Charles Slocum believes producers can stand to be more generous with DVD.
“We’ve been unhappy with the home video formula since 1985, which was in its early, early days,” said Slocum. “As we look back, it has been 25 years of revenue at this low, low rate. Writers pay their mortgage out of this. And it looks like we will have a very healthy DVD market for the next five to 10 years.”
Although Slocum is fighting hard to enhance DVD residuals, he insists the WGA is not trying to antagonize Hollywood.
“Our goal is to make a deal,” he said. “The writers don’t want a strike, but they will.”
With that stalemate—representing just one deal point out of more than two dozen that the WGA is seeking in a new contract—WGA membership has authorized a strike if the two groups can’t come to terms by Halloween. The WGA hopes to double the approximate 4¢ per DVD unit sold that writers currently receive.
The WGA also is looking to substantially hike writers’ share of electronic sell-through revenue, which is currently based on 1.2% of the licensing fee production companies receive for each downloaded item.
A short-term strike is unlikely to curb DVD output, as plenty of titles are hitting shelves through December. But studios and retailers agree that, if writers refuse to work for six months or longer, all entertainment will eventually suffer.
“Naturally, if there are fewer movies being produced, the whole industry, including the DVD market, takes a hit,” Virgin Megastores senior product manager Chris Anstey said.
No contacted studio wanted to comment on the record about a ‘what if’ strike scenario.
Some executives, however, expressed confidence that films will flow to the home entertainment window as usual through fourth-quarter 2008. Many studios have already staked out summer premiere dates for next year’s tentpole theatrical titles, indicating production is well underway. 20th Century Fox even planted a flag on May 1, 2009, for X-Men Origins: Wolverine.
But even if big DVD titles remain free flowing for some time, disc divisions could still face challenges from fewer first-run theatrical and TV projects bowing from sister studio units. The TV sector is among the most threatened in a prolonged writers’ boycott, because of the vast amount of scripting required for a typical 10- to 20-episode TV season.
“You can’t not think about this,” said one studio source. “It just puts more pressure on the home entertainment division to make up for [lost] revenue.”
Less theatrical product may work to lengthen windows to DVD, the source added, as movies will have more room to maximize runs at theaters. Yet, there is the opposite thought from others that windows could shorten if DVD product does start drying up on shelves.
Such an overall ‘I don’t know’ mentality also is frustrating the industry because there is no true precedent to follow. During the last big WGA strike in the mid-’80s, the home entertainment business was much smaller and rental-oriented.
In the months leading up to WGA’s upcoming contract expiration, studios have been placing rush orders on scripts to ensure they will have content to draw from for some time.
“We are prepared and should be fine for a few months,” said another studio source. “It depends on the strike, how long it goes. We’ve been expecting the possibility of a strike for quite some time.”
However, retailers are dreading a coming load of so-so product with such stockpiling.
“If they rush something onto film, so they have some product, [but] is that necessarily high quality?” asked Tom Paine, owner of Redmond, Wash.’s DVD Now!
A studio source said, “You will never see a dip in the level of product, but you might see a dip in its quality.”
Retailers figure they can easily make do with merchandising catalog. But they hope studios don’t start digging too deep into libraries.
“There could be lots of product that hasn’t been released that will all of a sudden start seeing the light of day,” said Todd Zaganiacz, National Entertainment Buying Group president. “If a movie doesn’t get released, there is probably a reason for that.”
Yet Virgin’s Anstey said that, as long as studios guide them with catalog strategy, stores can weather through a drop in new releases.
“Whenever there is a problem with a slow release schedule, the studios step up and get more aggressive with catalog offers to help boost sales,” Anstey said. “Studios have their goals regardless of release schedule, so there’s an even greater need for them to be more interactive with retailers during slow periods.”
Ned Randolph contributed
