DGA Monthly

6 I D G A M O N T H L Y Understanding Residuals Residuals are one of the most essential forms of compensation for DGA members. They ensure that when work continues to generate revenue over time, the people who made it possible share in that ongoing success. For decades, residuals have served as a statement of principle that creative labor has enduring value, and that value deserves to be recognized when a work is reused, re-aired, or streamed to a new audience. But while most members appreciate when their residuals checks arrive in the mail, fewer fully grasp how residuals came to be and why they are critical to protecting their livelihoods. What Are Residuals? At its simplest, residuals are payments made to Directors and members of the directorial team when their work is reused beyond its initial exhibition. If a television episode is rerun, a feature film is licensed to a new platform, or a project finds a second life on streaming, residuals ensure that the original filmmakers continue to receive compensation proportionate to that reuse. This system began in the early days of television when reruns became popular, and the Guild noted that Directors deserved to share in the revenue generated by the additional re-airings. Over time, residuals have expanded to cover home video, basic cable, pay television, and new media, including free streaming (AVOD) and subscription services (SVOD). How Are Residuals Calculated? Each reuse market has its own formula, but the guiding principle remains the same: when work continues to exhibit, the DGA members who made it should continue to be paid. Residuals aren't arbitrary numbers, rather they're grounded in formulas negotiated through the Guild's collective bar-gaining agreements. The amount depends on several factors, including: • The type of production: feature film, episodic television, made-for-SVOD, etc. • The reuse market: broadcast reruns, Pay TV exhibition, streaming availability, etc. • The distribution territory: domestic or international. For example, when a network television episode reruns in primetime, a fixed residual fee is paid to the Director. When a basic cable episode re-airs on basic cable, residuals are paid as a run-based payment which declines over time. Made for pay television and Made for SVOD titles pay a subscriber-based yearly exhibition fee. And feature films and television licensed to streaming platforms generate residuals based on license fees. The residuals system has evolved to reflect how audiences consume film and television. From Blockbuster DVD rentals to Netflix – and now dozens of global streaming platforms with hundreds of millions of subscribers – each contract negotiation has sought to ensure that as the business models change, the principle of fair compensation remains. Why Are Residuals So Important? Residuals uphold the integrity of creative labor, recognizing the work of the Director is integral to the economic success of the project and its reuse. Residuals affirm that a Director's contribution doesn't end when production wraps. The work continues to live on, often for decades, reaching new audiences and generating new revenue streams. Residuals ensure that our members are not left behind while studios and producers continue to profit from their work. Residuals are more than just extra income; they are a critical form of economic stability. They are essential in maintaining a viable middle class within the entertainment industry and reinforce the idea that creative contributions retain value long after initial release. For many DGA members, they often bridge the gap between jobs in an unpredictable career. A project's ongoing success can mean the difference between a tough year and a sustainable one. In 2024, the DGA collected $537 million in residuals, including over $100 million which went to help fund the Pension Plan to the benefit of all members, not just those earning direct residuals. Over the past 10 years, this is a total of $4.4 billion collected for our members. These numbers demonstrate that residuals remain a significant and growing component of members' compensation, but they also highlight the importance of vigilance. As distribution models continue to evolve, residuals must evolve with them, and the Guild must also ensure that we collect every dollar owed to members. — continued on page 8

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