Just back from London, Fred Bimbler reports that the highly anticipated 6-part crime thriller, Baghdad Central, starring CDAS client Waleed Zuaiter, will soon debut on the UK’s Channel 4 and subsequently stream on Hulu. Watch the trailer.
CDAS achieved a Tier 1 ranking nationally for Entertainment Law – Motion Pictures & Television as well as Trademark Law. The firm was also ranked nationally in Tier 2 for Copyright Law. Within New York City, CDAS was ranked in Tier 1 for Entertainment Law – Motion Pictures & Television, Copyright Law and Trademark Law, and in Tier 3 for Media Law.
These competitive rankings are based on extensive client and peer review, focused on practice group expertise, responsiveness, understanding of business needs, cost-effectiveness, and other important parameters. Inclusion in “Best Law Firms” is considered a significant achievement.
1. AB5 Brings Uncertainty: The new California Assembly Bill 5 (AB5) became effective on January 1, 2020. Originally created to codify the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), and to address the increase of misclassification of workers as independent contractors, the drafting of AB5 is so broad that it greatly expands the definition of “employee” in a way that potentially reclassifies most independent contractors as employees. This has huge potential repercussions for many companies doing business in California, including those in the entertainment industry (which has traditionally been extremely reliant on independent contractors), as companies may now need to provide full employment benefits to individuals previously characterized as independent contractors.
While there are certain statutory exemptions, the exemptions do not cover traditional entertainment job categories. There is currently very little guidance as to how the law will be interpreted and enforced, and how it will interact with guild rules. It is incumbent on all studios, producers, networks, and other entertainment companies to watch developments closely, and to consult with knowledgeable counsel when in doubt.
2. Continued Evolution in Streaming: The rise of streaming platforms has dominated the film and episodic programming business over the past few years. 2020 is poised to bring the most significant year of change yet, as new platforms such as HBO Max, Quibi and Peacock will join the recently launched Apple TV+ and Disney+, and incumbents such as Netflix, Hulu, and Amazon. Each of these platforms is targeting a slightly different position in the marketplace, and the economics for content producers vary on a platform-by-platform basis based on the rights and territories that each discrete platform is presently seeking to acquire.
From a deal-making perspective, it is possible that the increased competition will put pressure on platforms to offer greater transparency into the performance of their content and potentially more meaningful participation for creators in the upside of successful series and movies. Additionally, it will be interesting to see if Netflix blinks with respect to its (to date) steadfast insistence on dropping all series on an all-at-once “binge” model, given the plaudits and positive buzz that Disney+ has received for releasing episodes of The Mandolorian on a weekly basis. Finally, Quibi is a truly interesting new entrant that is planning some fascinating creative experiments with short form and interactive content, in addition to providing producers with a business model that is arguably more favorable than some of its competitors.
3. Exclusivity Reigns in Podcasting: 2019 was a year of huge growth and continued maturation for the podcast industry. Mainstream coverage of the industry expanded significantly, many major celebrity names launched podcasts for the first time, and a number of big media conglomerates entered the space or materially increased investments in their podcast divisions. The maturing of the podcast industry has had notable effects on the business side of this burgeoning medium. Participants at all levels in the value chain have started to stake a claim to ownership of, or participation in, podcast rights and revenues. Moreover, the deal-making has become much more sophisticated. Prior to 2019, the dominant podcast distribution model was very simple – make your podcast available on as many ad-supported platforms as possible, and split revenues between stakeholders (usually the creator and the production company or network) (often in a straight 50/50 configuration). This began to change during 2019 as certain companies grew and engaged more experienced representation, and entrants such as Spotify and Luminary started to lock down exclusive rights to content.
Expect the podcast content arms race to heat up in 2020, as high-profile shows and creators commit exclusively to platforms in exchange for sizeable minimum guarantees. However, platforms that offer podcasts in combination with music (such as Spotify, Apple, iHeart, and Pandora) would appear to be best positioned in the market versus pureplay podcast subscription outlets because of their existing subscriber bases and the value proposition of bundling music with podcast (and, indeed, expect 2020 to be the year of the “music podcast”).
4. Gaming Grows: As Netflix Chairman and CEO Reed Hastings famously opined, Netflix is primarily competing with Fortnite rather than with other SVOD platforms. Expect 2020 to be a huge year for gaming, with the release of several big titles (such as Cyberpunk 2077 and The Last of Us 2) being followed by the impending launch of much-anticipated new consoles Playstation 5 and Xbox Series X in the fall.
The continued growth of gaming will fuel a corresponding growth in esports and “game-adjacent content culture” – the creation, consumption and interactive fan participation in content around the culture of videogames, via platforms such as Twitch, Mixer, YouTube and Instagram. All of the next-generation gaming platforms will include built in recording and streaming capabilities allowing gamers to easily create media and engage with other users. While this arguably implicates copyright issues for rightsholders, many of the game companies have taken a permissive stance regarding streaming (and other activities, such as creating derivative works), believing it to be helpful to their business – although distributors must also be cognizant of other issues such as right of publicity.
Additionally, as discussed in a previous blog, expect a flurry of announcements during 2020 and beyond with respect to entertainment extensions of videogame properties – most notably film and TV adaptations, but also podcasts and graphic novels. A significant portion of these will probably involve the original game developers and/or publishers in a meaningful way, as rightsholders understand the importance of maintaining a strong and consistent brand across platforms.
Other sectors of the entertainment business should ignore gaming at their peril. For more, we recommend reading “7 Reasons Why Video Gaming Will Take Over” by Matthew Ball.
The videogame industry is now the most profitable individual sector of entertainment, having experienced exponential growth over the past forty years. Great games can quickly generate a large and unusually engaged fanbase, and as a result it could be argued that games will be the single biggest source of major entertainment brands for the foreseeable future. A cursory glance at Twitch reveals tens or hundreds of thousands of viewers concurrently watching streamers playing games like Fortnite, The Witcher, Sekiro, Overwatch and Grand Theft Auto. Even indie titles like Hollow Knight, Stardew Valley and Untitled Goose Game can attract thousands of attentive viewers. The potential to grow videogame properties into multi-platform entertainment franchises is greater than ever.
Historically, television and film adaptations of videogames have been critical and commercial misfires. However, the general growth of gaming, the increased sophistication of storytelling in videogames, and the general demand for IP-based content (driven in part by the emergence of multiple new streaming platforms) has created a perfect storm. Accordingly, we are currently seeing more videogame adaptation deals than ever before, some of which are very complicated and extremely high level.
While the fundamental structure of acquisition or licensing deals for videogame properties is similar to that used when acquiring older forms of media such as books and articles, there are some specific considerations when dealing with videogame properties, some of which are listed below. It is strongly recommended that parties on both sides of the negotiation engage an attorney and/or agent who is familiar with both the film or TV (as applicable) and videogame businesses to negotiate the deal. It will be very difficult to close a deal without an understanding of the gaming world and what motivates its rightsholders.
- What is the “Property”? : Up until recently, it was relatively easy to define what a “game” was. Games came on disc, cassette, cartridge or CD sold as physical products through brick and mortar retailers for a one-time payment. Successful games yielded sequels and spinoffs (and sometimes “add ons”), but games were generally released in a fixed form. With the emergence of digital distribution and the concept of “games as a service,” that has gone out of the window. Games are now routinely and regularly patched, updated, supplemented and expanded via a combination of free and paid downloadable content (or “DLC”). For example, the game No Man’s Sky has been updated and expanded so comprehensively since its launch in 2016 that it is almost unrecognizable as an experience from the version released at launch. As a result, it is imperative that buyers understand what they are acquiring – and unless negotiated otherwise for a very specific reason, the “Property” that is granted to the buyer should include all elements, versions, expansions and content relating to a title, for as long as such title is supported. Ideally, all sequels and spinoff games would be included in the rights grant as well (but that is a more nuanced subject that may require some discussion).
- Investigate Third Party Interests: While other forms of properties (including novels and podcasts) can have complicated chain-of-title issues, videogames are particularly likely to have unforeseen ownership and/or approval issues complicating the acquisition process. Often the rights in the game may be owned and controlled by a publisher, but sometimes the actual creator or developer may have approval rights or other interests that need to be addressed. Things get even more complicated when dealing with Japanese properties, where there may be one or more intermediaries to deal with before one is able to negotiate directly with the rightsholder. It is important to ask the right questions at the very start of negotiations to be able to identify and address any specific issues.
- Discuss Controls and Approvals: While television and (particularly) film producers often view their medium as the pinnacle of artforms, it is important for producers to understand that – in many circumstances – a videogame publisher or developer does not need them. Many videogame rightsholders make millions or billions of dollars solely from videogame sales, which can then be supplemented through the sale of DLC and merchandise. Even independent developers may be able to make a good living through a combination of the right business model and smart engagement with their fanbase. As a result, rightsholders will often be extremely cautious about entering into any kind of arrangement that could tarnish or dilute their brands. No sophisticated rightsholder today would agree to the kind of agreement that yielded the likes of Super Mario Bros. (1993), Street Fighter (1994), BloodRayne (2006) or Tekken (2009), all of which were critically lambasted and bore little relation to their source material.
Indeed, many videogame rightsholders are unlikely to be prepared to enter into a traditional option purchase type arrangement where they are viewed as passive rightsholders without any kind of active involvement or approval. Producers therefore need to think carefully and walk a tightrope to ensure that they make the rightsholder feel invested and comfortable, without ceding control in a manner that could jeopardize their ability to set up and produce the project. Of course, if they can strike the right balance then the dividends – both creative and financial – could be spectacular.
Under the Writers Guild of America Theatrical and Television Basic Agreement (the “Basic Agreement”), credited writers for television motion pictures, including episodic programs, are entitled to receive compensation for the reuse of their work, also known as residuals. Television residuals were first negotiated by the Writers Guild of American (the “WGA”) in 1953, under the theory that a rerun of an existing program reduces employment for new products. Consequently, residuals are payable for the reuse of a writer’s material, as opposed to the original exhibition. Though initially limited to programs made-for-television and to five rerun payments, residuals expanded over the years not only to include home video, pay television, cable, new media, and others, but also to payments in perpetuity.
Whether or not a television writer is entitled to receive residuals is ultimately governed by the WGA’s credit determination. Per the Basic Agreement, if the guild accords a “Written by” credit to a writer, such individual is entitled to receive one hundred percent (100%) of available residuals, while a writer that is accorded a “Teleplay by” credit can claim seventy-five percent (75%) of available residuals; if the guild accords only a “Story by” credit to a writer, he or she is entitled to receive twenty-five percent (25%) of available residuals. Furthermore, for an episodic series, if a writer were entitled to Separation of Rights and “Created by” credit on the series, such writer would be entitled to a residual on the creator sequel payment minimum payable for each episode of the series produced beyond the pilot. Continue reading
The television landscape is changing dramatically. New and major players have disrupted traditional models, as networks and studios explore different approaches and partnerships. Beginning with an overview of the biggest “new” player, the following links provide some noteworthy examples of how the streamers continue to expand, and what everyone else is doing to adapt to the 21st century television ecosystem.
According to Vulture, Netflix now makes more television than any network in history, and with a plan to spend $8 billion on content this year, it’s not showing any signs of slowing down. Driven by a desire to scale and grow, Netflix is leveraging its impressive stable of talent and reams of user data to expand into new genres and countries. But considering Netflix’s recent earnings report, which revealed slower membership growth than forecasted, will it continue the pace of this expansion? Vulture’s profile of the streaming giant takes a deep look at the who, how, and why of Netflix’s ongoing success, providing a great framework through which to analyze the future of the company. Continue reading
The U.S. District Court for the District of Arizona in Lundin v. Discovery Communications ruled that a defamation suit brought by a reality television star against the network and producers of a reality show was not barred simply by virtue of an exculpatory “Assumption of Risk” provision containing a waiver of all claims. Significantly, the ruling stands for the proposition that there is no special exception for reality television or documentary programming which would bar intentional tort lawsuits. This decision could have potentially significant implications in the reality television sector, as many reality stars may now have recourse for the oft-cited “bad edit.”
The agreement at issue was entered into by Cody Lundin – an internationally recognized professional survival instructor, best-selling author, and survival and sustainability consultant for national and international news outlets – in connection with his appearance on Discovery Channel’s “Dual Survival.” Lundin served as the show’s on-camera host, wilderness survival expert, and consultant. The show features a pair of survival experts in predetermined scenarios set in challenging environments. For instance, Lundin and his co-hosts have been marooned on an island, lost in a jungle, and stranded in the desert, all with minimal survival gear. Continue reading
On Monday a California appeals court handed down a decision in the closely watched case of de Havilland v. FX Networks, LLC et al., triggering a collective sigh of relief from studios, networks, and other content producers. The court’s decision reaffirms two widely recognized principles: (1) that the First Amendment’s protection of creative works is not limited by the mere fact that a work generates income, and (2) that an individual cannot censor the way in which she is depicted in a creative work merely because she does not like that depiction.
These principles, as applied to the entertainment industry, have been challenged in recent years with a wave of cases such as de Havilland. For instance, a case in New York, Porco v. Lifetime Entertainment Services, LLC, was allowed to proceed after an appellate court held that the newsworthiness exception to New York’s statutory right of publicity did not apply to a docudrama that substantially fictionalized the life story of a real person. The court stated that such a work was “mainly a product of the imagination” and thus “nothing more than [an] attempt to trade on the persona of the plaintiff.” Continue reading
The last few months have seen a number of high-profile deals in episodic programming, spurred in part by the entry of a number of significant new players in the marketplace. Here are a few particularly noteworthy entries:
Apple is anticipated to become a major purchaser of entertainment content, and it made a splash with its first show announcement – a two-season order for a show starring and executive produced by Jennifer Aniston and Reese Witherspoon, set inside the cutthroat world of morning television.
Everyone is looking for the next “Game of Thrones and “The Kingkiller Chronicles,” in development at Showtime and based on Patrick Rothfuss’s acclaimed fantasy series, may be it. “Hamilton” creator Lin-Manuel Miranda is attached to executive produce, and will contribute music to the series – a key development as music is an important component of Rothfuss’s books. Continue reading
Inside Counsel’s Senior Editor & Community Manager, Rich Steeves, published a five-part series titled “Where Former Entertainment GCs Go Next” last week, which was prominently featured on the Inside Counsel website.
The series, which discussed the so called “third act” for successful general counsel, provided a comprehensive profile of CDAS and the services the firm provides to clients, while also discussing the appeal the firm has had for former GCs in their transition to a new environment.
CDAS Partners Aileen Atkins, Frederick Bimbler, Douglas Jacobs, Eleanor Lackman, Marc Simon and Stephen Sheppard were interviewed for the series. You can find a link to each part of the series below.
PART 1: http://www.insidecounsel.com/2015/04/27/third-act-where-former-entertainment-gcs-go-next-p
PART 2: http://www.insidecounsel.com/2015/04/28/third-act-where-former-entertainment-gcs-go-next-p
PART 3: http://www.insidecounsel.com/2015/04/29/third-act-where-former-entertainment-gcs-go-next-p
PART 4: http://www.insidecounsel.com/2015/04/30/third-act-where-former-entertainment-gcs-go-next-p
PART 5: http://www.insidecounsel.com/2015/05/01/third-act-where-former-entertainment-gcs-go-next-p