#NewsBytesExplainer: What are residuals—Hollywood actors-writers' unions' key concern
What's the story
The historic double strike by writers and actors has brought Hollywood to a standstill.
The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) leaders joined the ongoing strike led by the Writers Guild of America (WGA) last Thursday.
They argue that the streaming era has diminished their income—with residuals remaining a key concern.
Let's decode residuals and how these affect actors financially.
Explained
Residuals: What are they all about?
Residuals can be best understood as the additional income received by some actors when their work is reused, rebroadcast, or released on DVD or aired on cable networks.
The purpose of residuals is to ensure that the performers or actors and other creative professionals are fairly compensated for their work.
It's noteworthy that unlike regular payments—not all actors are eligible for residuals.
Concept
How are residuals calculated?
Residuals are extremely complex in their nature.
The calculation involves a percentage-based approach, where the amount is determined by a portion of the revenue generated from the distribution of the work.
This percentage depends on multiple factors, including the duration of the actor's presence on the set, the original payment received, the actor's stature, and the market value of the production, among others.
Change in dynamics
How do residuals work in the streaming era?
During the heyday of the cable era, reruns of shows resulted in higher residuals for actors.
However, this scenario changed with the advent of streaming services—where residuals are not determined by the number of times an episode or movie is viewed; instead, these payments are based on the subscriber base.
This means actors associated with Netflix are likely to earn more than smaller streamers.
Accusation
Writers, actors accused studios of making profit off their work
Irrespective of whether a show is a hit or a flop, it generates the same amount in residuals.
Actors and writers argue that studios are capitalizing on their work without adequate compensation for the show's success.
"You cannot change the business model as much as it has changed and not expect the contract to change too," SAG-AFTRA President Fran Drescher said in a speech.
Twitter Post
Take a look at the scenes from the picket line
Inigo Montoya #SolidaritySummer pic.twitter.com/1F67DtcHo0
— Scott Dworkin (@funder) July 14, 2023
Statement
Residuals can help actors pay their bills: Actor Sanaa Lathan
Actor Sanaa Lathan—who joined the picket line outside Warner Bros. Studios in California, explained how "residuals can help actors pay their bills while they audition."
Lathan explained, "I think I got my SAG card doing a Secret deodorant commercial. I was able to pay my rent back then for a whole year while I was still a struggling actor. That would never happen today."
History
For how long have residuals existed?
Before the 1950s, actors only received a one-time payment for their work, and the concept of residuals wasn't prevalent.
Under the leadership of Ronald Reagen, the actor who would later become the President of the US, SAG successfully negotiated for the inclusion of residuals in TV contracts.
Later, AFTRA—a separate entity at that time—also achieved similar victories regarding residuals for movies in 1960.