While streaming video on-demand began impacting the box office industry before the pandemic, COVID-19 forced film production to halt and closed cinemas across the country. And even with movie production since resuming, the pandemic has created uncertainty in many aspects of life, including consumers’ dwindling confidence in visiting physical venues like movie theatres.
Why should I go to the movies again when I can watch all the new releases at home? This question was at the center of the Johansson v. The Walt Disney Company controversy when Black Widow was concurrently released on the big screen and Disney+ in early July 2021.
What Does the Contract Say?
Following the release of Black Widow, actress Scarlett Johansson sued The Walt Disney Company in a Los Angeles Superior Court for breach of contract. The suit claimed that the studio sacrificed the film’s box office potential when it released the film on Disney+, thus growing the streaming service and getting themselves off the hook with her salary, which was based largely on box-office performance. Disney’s argument seemed to center on questions about whether they ever explicitly guaranteed “exclusive” theatrical release in the first place. And even if a guarantee was implied, how long must the film play in theaters before it can show up on the Disney+ streaming service?
The blurred lines in these questions seem to be the ambiguity on which Hollywood contracts are historically built. The idea is that the parties accept the ambiguity by design with the understanding that all can be worked out in negotiation later. The lawsuit has revealed that Disney flipped this status quo on its head by prioritizing the rule of contract law over the rule of relationship in how it has handled the conflict with Johansson.
All’s Well That Ends Well?
Johansson and Disney settled the lawsuit in September 2021, with the terms of the deal remaining undisclosed. The actress released a statement indicating that she was happy to resolve the differences and looked forward to continued collaboration in the future. Disney Studios chairman Alan Bergman added that he was also pleased to have come to a mutual agreement with Johansson and looked forward to their upcoming projects together, including Disney’s Tower of Terror.
But is this really the happy ending to the story? While Johansson and Disney have seemed to find common ground, this case could (and most likely will) inspire more lawsuits from other actors against executives. The most significant impact seems to be Hollywood’s transforming nature of dealmaking. While Disney faced criticism in the heat of the controversy for the way it dealt with Johansson, WarnerMedia took a proactive approach on the issue by paying out as much as $200 million to the stars of Warner Bros. films that were simultaneously opening in theaters and on its streaming service HBO Max.
We can learn a clear and hard lesson from Johansson and Disney—contract ambiguity continues to become less tolerable. Don’t forget to get it in writing.
