Scarlett Johansson’s Disney Lawsuit Could Force Hollywood Studios To Rethink Streaming Profit Split

The COVID-19 pandemic has rapidly altered the way films are shared with audiences, with many being launched directly onto streaming platforms first. With that, Hollywood may be forced into renegotiations with its acting stars.

Like a jarring plot twist in your favorite movie, Scarlett Johansson’s lawsuit against Disney last week over revenue sharing for streamed viewing of the new “Black Widow” Marvel Comics film is the surprise scene that Hollywood studios never saw coming. The 36-year-old actress argues, to put it bluntly, said she’s getting ripped off because Disney has refused to renegotiate a contract that compensates her based on the film’s theatrical box-office sales, causing her to lose out on millions of dollars of digital revenue.

Disney announced in March that it would premiere “Black Widow” on its streaming platform at the same time as it opened at big-screen cinemas. Disney+ subscribers were offered the chance to pay a premium of $30 to watch the movie at home instead of heading to theaters. The dual-debut decision came at a time when the battered movie industry was just beginning to rebound following extended closures of cinemas and film sets throughout the world due to the pandemic.

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Although “Black Widow” made $80 million on its North American box office debut, plus $78 million from overseas, ticket sales dropped sharply in the weeks that followed. Global box-office receipts now amount to just $389 million, making “Black Widow” one of Marvel’s lowest-grossing releases ever. But Disney pocketed an extra $60 million as a result of its Disney+ Premier Access release.

Johansson stated that the lackluster theatrical release is a direct result of Disney’s decision to make the film available for viewing at home. Some reports say she has lost out on as much as $50 million because of it.

The lawsuit comes in the wake of a difficult year for theater chains. With cinemas forcibly shuttered across both the U.S. and the wider world, the industry has lost its grip on its traditional three-month theatrical release window that forbids film studios from releasing new titles on DVD or elsewhere until that period is up. Now, many movies are showing up on streaming services at the same time as their box office release.

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Meanwhile, a major stratification of streaming services is taking place. Film studios have jumped at the opportunity. The likes of Warner Bros, Paramount, Universal and Disney have all created their own paid streaming platforms to entice viewers as they demand more home entertainment than any time in history.

Johansson’s lawsuit may have come as a surprise, but it was an inevitable challenge to the way Hollywood studios conduct themselves. As they grab a bigger share of the pie for themselves, it follows that the stars of the shows will want a fairer share.

However, Disney has shot back at Johansson. In a statement, it retorted: “There is no merit whatsoever to this filing. The lawsuit is especially sad and distressing in its callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic.”

Disney’s pushback was predictable, as the company has had plenty of its own problems during the pandemic. Last year, it laid off more than 28,000 staff before announcing a major restructuring of part of its business to focus more on video streaming. It said at the time that the global pandemic “accelerated the rate at which we made this transition, but this transition was going to happen anyway.”

Although streaming revenue has given Disney a boost, it remains a challenging environment. A surprise slowdown in new subscription growth at rival Netflix caused some analysts to speculate about the start of a fading subscription boom. Those fears will likely be heightened as people begin spending less time at home, and may prompt streaming service providers to fight to keep as much of the revenue as they can.

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But Disney and others will likely be forced to recognize that they cannot be the only beneficiaries of the new streaming model. With streaming, it’s becoming clear that actors and actresses are being short-changed. And Johansson most likely isn’t the only one. Her suit, if successful, could embolden more actors and actresses to seek additional compensation for films that migrated to streaming services faster than they typically would have. Animators, editors and writers, whose contracts also tend to prioritize box-office results, may be similarly encouraged.

We don’t know exactly what Johansson’s contract states, but she does seem to have a point. Essentially, she’s asking for Disney to honor the spirit of her original agreement and pay her fair compensation. Disney is, after all, using her name to drive new subscriptions, and is getting more money that it doesn’t have to share with movie theaters. The lawsuit bears similarities to Taylor Swift’s crusade against the music streaming service Spotify, when she fought and won not only for herself, but for thousands of other, less famous artists that need every streaming cent they can make.

Whether Johansson wins or loses, studios will likely have to alter the way their contractual promises are structured. They will have to rethink how to measure a film’s success — and that will almost certainly mean giving less priority to box-office percentages. And even if Johannson fails to recoup what she says she has lost, the net cost to Hollywood’s major film studios will surely add up to far more in the long run.