We reported yesterday how a deal between Warner Bros. and Legendary Pictures appeared imminent for at least one of their co-productions and upcoming releases. Today some details on the mechanics of these deals that they are negotiating was revealed.
It is going to cost Warner Bros. so they must be pretty confident in the numbers they have seen. Wonder Woman 1984 did good business for them and they must feel it is repeatable.
One of the driving forces behind the backlash to their original announcement was cast, crew and production house bonuses based on box-office performance being wiped out at a stroke of Warner Bros. pen when they decided to punt everything at HBO Max. Many people in the industry take very little in the way of salary up-front in favor of these back end deals.
No cinema release, no box-office share or points.
Now Bloomberg report that these deals being worked on at Warner Bros. examine new payments for anyone on the hook for a downstream bonus based upon streaming numbers and streaming fees. According to the report these:
“…guarantee payment regardless of box-office sales and to increase the odds of performance-based bonuses…”
The Godzilla vs. Kong deal is said to be based upon this model and HBO Max will pay Warner Bros. a considerable fee for the movies. Warner’s would then pass some of this on to production partners, filmmakers, casts and crews.
The deal also reduced the hurdle rate for bonuses to kick in on theatrical receipts by 50% to take into account limited theater openings and a seriously reduced global theater landscape. This is on a sliding scale that will adjust depending on pandemic progress, major market changes as a result of vaccination roll-out etc.
Dune, The Matrix 4, Godzilla vs. Kong, The Conjuring 3 and the Space Jam sequel are all thought to be exploring similar deals.