Revenue is used because this industry is notorious for “Hollywood accounting” to avoid having any actual profits to avoid residuals based on net.
Some of the biggesr blockbusters of all time are, thanks to Hollywood accounting, net losers. Forrest Gump is a classic example: it made almost a billion dollars in revenue vs a $55 million budget. But thanks to tax evasion techniques the movie is actually a huge financial loser on paper, losing more than $65 million if you look at net.
You can’t trust non-workers, who exist entirely off the wealth they can cheat out of workers, to be honest.
So that is why gross revenue is used in Hollywood.
Edit: to add on to that Gump example, the author was supposed to be paid based on net. He got totally fucked which is why no sequel was made. His IP created a billion+ dollars out of thin air, but blood sucking capitalist parasites leech it all away with tax evasion.
Great breakdown! Given that this is Lemmy and we trend toward more tech focused, people might gel better with Apple and Microsoft. If anyone is confused about what you wrote but the my understand big tech tax evasion, it is basically the same set of steps.
Big tech just doesn’t pay residuals.
Apple is well known for their Irish tax haven holding all of their IP and other rights so Apple can lease it back from themselves and account for pure profit as expenses. That’s also how Amazon pays little to no taxes. Or sometimes these company’s pay negative tax rates meaning they get government welfare to buy billionaires fudge rounds presumably, in conservative populist parlance.
Also to add on to my earlier comment, after some research it appears that the standard union contract prior to the strike has always been based on gross revenue instead of net. So it is consistent with why the WGA put this out.
Hollywood accounting doesn’t apply to studios that are publicly traded, only their projects. But anyway, because they’re public, we know what their profits are:
2022 profits
Disney (NYSE: DIS) $28.321 billion
Netflix (NASDAQ: NFLX) $12.447 billion
Warner Brothers Discovery (NASDAQ: WBD) $13.375 billion
Some of these are obviously corporate figures and don’t necessarily reflect how well the production department of each corp is doing. Still, it reflects the fact that these corporations could easily (well, mostly) absorb the costs of what SAG-AFTRA/WGA are asking for.
Sony has all their fiscal year information published but not collated by calendar year, and I couldn’t be bothered to dig it up myself, so I just took their word for it.
That’s really interesting. Thanks for explaining that, it was something I was totally unaware of. Now I have changed my mind and I think the WGA listed the right numbers.
Revenue is used because this industry is notorious for “Hollywood accounting” to avoid having any actual profits to avoid residuals based on net.
Some of the biggesr blockbusters of all time are, thanks to Hollywood accounting, net losers. Forrest Gump is a classic example: it made almost a billion dollars in revenue vs a $55 million budget. But thanks to tax evasion techniques the movie is actually a huge financial loser on paper, losing more than $65 million if you look at net.
You can’t trust non-workers, who exist entirely off the wealth they can cheat out of workers, to be honest.
So that is why gross revenue is used in Hollywood.
Edit: to add on to that Gump example, the author was supposed to be paid based on net. He got totally fucked which is why no sequel was made. His IP created a billion+ dollars out of thin air, but blood sucking capitalist parasites leech it all away with tax evasion.
Removed by mod
Great breakdown! Given that this is Lemmy and we trend toward more tech focused, people might gel better with Apple and Microsoft. If anyone is confused about what you wrote but the my understand big tech tax evasion, it is basically the same set of steps.
Big tech just doesn’t pay residuals.
Apple is well known for their Irish tax haven holding all of their IP and other rights so Apple can lease it back from themselves and account for pure profit as expenses. That’s also how Amazon pays little to no taxes. Or sometimes these company’s pay negative tax rates meaning they get government welfare to buy billionaires fudge rounds presumably, in conservative populist parlance.
Also to add on to my earlier comment, after some research it appears that the standard union contract prior to the strike has always been based on gross revenue instead of net. So it is consistent with why the WGA put this out.
Although, as the chart shows, Apple is also a production company now, so it also needs to start paying residuals.
Hollywood accounting doesn’t apply to studios that are publicly traded, only their projects. But anyway, because they’re public, we know what their profits are:
2022 profits
Some thoughts:
That’s really interesting. Thanks for explaining that, it was something I was totally unaware of. Now I have changed my mind and I think the WGA listed the right numbers.