SAG-AFTRA Videogame Strike Likely Tonight as Union Blasts ‘Freeloader’ Industry for Refusing Residuals

SAG-AFTRA

A culture clash between Hollywood and Silicon Valley over the concept of residuals is driving the parties towards a strike, with no talks scheduled before tonight’s deadline.

SAG-AFTRA blasted the videogame industry as employing a “freeloader model of compensation” in a harshly-worded statement Thursday afternoon that underlined the likelihood of a strike at 12:01 a.m. Friday morning (Thursday night) as the parties remained at odds on the issue of residual-type compensation and with no further negotiations scheduled.

The union’s chief contracts officer, Ray Rodriguez, told The Hollywood Reporter late Thursday afternoon that he currently saw “no reason” a strike won’t occur, and that if it did, the work stoppage would last “as long as it takes” to reach a deal.

“We are saddened to learn that SAG-AFTRA has resorted to name calling,” responded the industry’s chief negotiator, Barnes & Thornburg’s Scott Witlin, in a statement to THR.  “Our decade-long principled disagreement has been characterized by more civilized discussion of our philosophical differences over how best to reward workers. SAG-AFTRA is a far better institution than that.”

Upfront salaries aren’t the issue, with the industry offering SAG-AFTRA an immediate nine percent increase in session fees to $900 per four-hour voice session. That would be a one-time increase over the three-year contract duration. The employers also are offering a per-session bonus structure.

The industry made its proposals contingent on the SAG-AFTRA membership ratifying the package by Dec. 1. Talks began in February 2015, and a small number of sessions have been held since then.

But the union’s anger erupted publicly in a statement: “This group of video game employers knowingly feeds off other industries that pay these same performers fairly to make a living. This represents a 'freeloader model of compensation' that we believe cannot and should not continue.

“In this industry, which frequently uses performers and understands the intermittent and unpredictable nature of this type of work, fair compensation includes secondary payments when games hit a certain level of success with consumers, not simply higher upfront wages,” the statement continued. “Secondary compensation is what allows professional performers to feed their families in between jobs.”

An industry spokesperson earlier told THR there was “a lot of respect around the table for SAG-AFTRA,” but added that if the union struck, “it would be a strike over terminology,” meaning the distinction between residual-type payments that the union wants and the per-session bonuses that the industry is offering.

“We have matched their proposal on economics almost identically,” said Witlin. “The one significant difference is what we are calling our Additional Compensation pay. We are disappointed that SAG-AFTRA refuses to allow its members to have a democratic vote on our proposal and decide if the significant money that is on the table is acceptable to them.”

Both sides seem hardened in their positions.

“No matter what these companies are peddling in their press releases, this negotiation is not only about upfront compensation,” said the SAG-AFTRA statement. “It is about fairness and the ability of middle-class performers to survive in this industry. These companies are immensely profitable, and successful games — which are the only games this dispute is about — drive that profit.”

The industry proposal is a bonus, starting at $50 if the actor works two four-hour sessions, and capped at a $950 bonus for eight sessions.

The union wants a backend structure referred to as “secondary compensation”: a payment for each principal performer equal to one quarter of the session fee for every session worked (capped at one session fee), per every 2 million copies or downloads sold or 2 million unique subscribers to online-only games, with a cap at 8 million units or subscribers. That means the secondary compensation could be as much as $3,600.

The industry spokesperson said that it would be unfair for performers, who typically work just a few days on a project, to receive secondary compensation while game programmers, artists and others who labor on staff for months or years do not.

However, the union points out that some of those employees do receive stock options, which are a more generalized form of secondary compensation: Option value is affected by how well a company’s games and other products perform, as well as by other factors. Rodriguez added that at least one company, Take 2 Entertainment (Grand Theft Auto), had an internal profit pool for its developers that paid out $271 million in a single quarter.

The union is offering to agree to a residuals buyout that would be economically similar or identical to the industry proposal, but the companies are rejecting that as creating an “HR nightmare” with other employees because the message would still be “residuals” even if companies elected to pay the upfront buyout instead. It would be the camel’s nose of residuals under the tent, from the company perspective.

For the union, of course, that’s exactly the point.

“These are companies that have an exploitative relationship to some of their employees,” said Rodriguez, citing seven-day workweeks. “They’re concerned that these folks are going to organize and demand more.”

If they did, he added, “we would support them on this,” seemingly raising the possibility that the performers union would help software developers unionize.

The culture clash between Hollywood and Silicon Valley was evident.

“This is a tech-based culture,” said the spokesperson, suggesting that importing entertainment concepts like residuals does not fit.

Rodriguez counters that the union is looking for a compromise, while the companies “have become absolutist.” But he acknowledged that achieving the secondary compensation proposal — which he called “not as good as residuals; it’s part way” — would give the union “something to build off of.”

The industry spokesperson and Rodriguez both acknowledged that they had taken issues of stunt safety and vocal stress off the table, with those matters to be addressed during the term of the contract, if an agreement is reached. A third issue, transparency (identification of project name and role before the performer takes the job), still seems a stumbling block.

A federal mediator was onsite during talks Wednesday from around 2 p.m. until 11 p.m. or so. The mediator remained on call Thursday, but there are currently no talks ongoing.

“Our doors remain open,” said the spokesperson.

Also on Thursday, the Canadian actors union ACTRA weighed in with a do-not-work order in solidarity with SAG-AFTRA.

“ACTRA is instructing our 23,000 members across Canada not to accept any struck work from the videogame companies involved in these negotiations effective 12:01 a.m. Friday, October 21, unless otherwise notified,” siad the union.

The practical effect of the action is unknown. The union also disclosed that an international network of actors unions, the International Federation of Actors, or FIA, had issued a statement of support at its meetings last month in Sao Paulo, Brazil.

The companies have emphasized that union performers represent 25 percent or less of all videogame performers. The union responds that its market share is higher when looking at top-performing games, but reliable figures are not readily available.

“We have proposed a fair payment structure that enables the sustainability of a professional performer community,” concluded the SAG-AFTRA statement. “These employers have unreasonably refused that. The time has come to end the freeloader model of compensation and that is why our members are united behind this cause.”

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