SAG-AFTRA Video Game Strike: Is It Just About Terminology?

SAG AFTRA HQ Signage - P 2015

SAG AFTRA HQ Signage - P 2015

There’s a principle involved — but a tech industry compensation mechanism might be the solution to the strike.

As Hollywood’s first strike in almost a decade entered its first day, the video game industry and SAG-AFTRA remained far apart on essentially a single issue: the principle of whether actors should even potentially receive some form of residuals.

The issue at this point is more one of principle than of economics. That’s because the union, in a concession to employers, is willing to allow the companies to buy out their proposed residuals with an upfront payment — virtually identical to the upfront payment that the companies themselves are proposing to make.

But there’s a difference: The companies are agreeable to an upfront bonus structure, but not to the union’s proposed backend “secondary payment” — even if that secondary payment (residuals) can be bought out by the bonus if the employer so desires.

Buyout? Bonus? “The terminology and other minimal differences are not worth striking over,” said Scott J. Witlin of the law firm of Barnes & Thornburg, the chief negotiator for the video game companies.

“This is not about terminology,” countered SAG-AFTRA chief contract officer Ray Rodriguez, the union’s chief negotiator on the contract, at a Friday press conference. “It’s about fair treatment for performers.”

“This contract is unique,” said actor Crispin Freeman, “because actors don’t share in profits.”

And of course, if it were just about terminology, why wouldn’t the companies simply agree to the union’s proposal? After all, if it’s not worth striking over, then it can’t be worth holding firm on either.

Rather, the issue for the companies is what they’ve described as a potential employee-relations problem with their other employees: Why should actors get residuals when developers on staff do not? And the companies are no doubt concerned that a residuals system, unfamiliar in Silicon Valley, could evolve in complexity and expense the way it has in Hollywood — and come to symbolize the union presence in an industry which largely has roots in a non-unionized sector.

In that context, SAG-AFTRA is a perhaps alien behemoth — 165,000 members strong, of whom 6,000 work often enough in video games that they were sent ballots asking for a strike authorization last year. The union wouldn’t say how many returned those ballots, but of those who did, 97 percent voted yes, giving the board the right to call the strike that began last night.

But if unions and residuals are alien to Silicon Valley, secondary compensation is not, because many developers get stock options, which are standard fare in the tech world and which, like residuals, are a form of secondary compensation dependent on success. This reporter asked Rodriguez whether the union had considered proposing that actors, too, get stock options rather than residuals. He seemed startled by the question and said that it had not.

Perhaps that would be a way of breaking the impasse. Options traditionally vest based on an employee’s tenure — for instance, 25 percent after one year, and then in equal quarterly amounts for the following three years. However, there’s no reason that options can’t vest based on performance criteria, such as number of product units sold (perhaps within a limited time frame), just like box-office bonuses or the union’s proposed secondary compensation, which kicks in at 2 million units sold.

That’s the level at which a game starts to turn a profit, according to negotiating committee chair and actor Keythe Farley.

“We are attempting to find a compromise between two cultures,” said Rodriguez. Maybe stock options, familiar to every tech company general counsel, would be a way of doing just that.