Why Subscriber Counts Now Determine Streaming Residuals Under SAG-AFTRA

The 2023 SAG-AFTRA contract overhauled how streaming services pay actors for residuals—the ongoing royalties that performers receive each time their show airs or becomes available. Unlike television, where residuals are tied to reruns and syndication and trigger after the first broadcast, streaming residuals depend on the size of a platform’s subscriber base, the production’s budget, and how long the content stays in the service’s catalog. This creates a direct link between a show’s distribution reach and an actor’s paycheck.

The contract delivered $1 billion in new compensation for actors overall, including updated streaming residuals. The contract set subscriber-based factors that determine how much of a performer’s capped pay translates into residuals. The system rewards actors on the largest platforms while applying lower factors for smaller streaming services. For producers and actors, understanding these calculations is essential: residual obligations significantly affect a project’s profitability and an actor’s long-term earnings from a single role.

Why Streaming Residuals Became an Issue

Before 2023, streaming services paid residuals poorly or not at all. Traditional television residuals were designed for a broadcast and syndication model where reruns were discrete events that could be counted and paid per occurrence. Streaming flipped that economics: a show uploaded once and watched continuously by millions generated nothing beyond the initial licensing payment.

SAG-AFTRA’s initial demand was aggressive—a 2 percent share of streaming revenue—but studios rejected it entirely. The result was a three-year agreement, ratified by union members in December 2023, that guarantees $120 million total in streaming bonus payments ($40 million annually) to performers on hit shows, plus ongoing residuals on all streaming content.

Subscriber Tiers
SAG-AFTRA’s subscriber factor is 47% for platforms with fewer than 20 million domestic or foreign subscribers, 60% for 20–45 million, 75% for 45–75 million, and 90% for platforms exceeding 75 million subscribers.

The Base Calculation: Compensation and Ceilings

All streaming residual calculations start with an actor’s total actual compensation per episode, but with a cap. SAG-AFTRA sets a ceiling based on episode length: $3,206 for episodes between 20 and 35 minutes, and $4,910 for episodes running 96 minutes or longer. If an actor is paid more than the ceiling—say, a major star earning $50,000 per episode—only the ceiling amount is used to calculate residuals. Shorter episodes incur lower ceilings; a 20-minute episode tops out at $3,206.

This ceiling exists across all residual types, whether domestic or foreign. The intent is to prevent high-paid stars from inflating residual obligations while ensuring that lower-paid performers receive meaningful ongoing payments. Once the ceiling is applied, that figure—called Total Actual Compensation (TAC)—becomes the base for multiplication by two percentages: one reflecting the platform’s size and one reflecting how old the content is.

Subscriber Factors: Bigger Platforms Pay More

The first multiplier depends on how many subscribers a streaming service has, domestically or abroad. SAG-AFTRA’s current system uses four subscriber brackets. Platforms with fewer than 20 million subscribers have a factor of 47%. Platforms with 20 million to 45 million subscribers pay 60%. Platforms with 45 million to 75 million subscribers pay 75%. And platforms with more than 75 million subscribers pay 90%.

These percentages are applied to the TAC ceiling. A performer with a TAC of $4,910 on a platform with more than 75 million subscribers would have that figure multiplied by 90%, yielding $4,419.00 before the exhibition year depreciation is applied. On a smaller service with 15 million subscribers, the same actor would multiply by 47%, earning $2,307.70 before depreciation. The subscriber factor represents a structural choice by the union: larger platforms generate more revenue from subscribers and can afford higher residual costs.

Exhibition Year Depreciation: How Content Value Declines

The second multiplier accounts for content aging in the streaming catalog. Residuals are not flat payments; they decrease as content stays longer in circulation. The contract uses an exhibition year system that mirrors how streaming platforms value older content. In the first year a title is available on a streaming service, the residual is calculated at 45 percent of the subscriber-adjusted TAC. In year two, it drops to 40 percent. In year three, it settles at 35 percent; SAG-AFTRA’s tables indicate the rate may decline further in subsequent years.

This depreciation reflects the economics of streaming: a show’s initial window of availability generates the most viewer engagement and value for the platform. After the first year, engagement typically declines as new content arrives and audiences move on. An actor might receive $1,988.55 in year one (45 percent of $4,419.00, the subscriber-adjusted TAC on a platform with more than 75 million subscribers), $1,767.60 in year two (40 percent), and $1,546.65 in year three (35 percent). For long-running franchises or popular catalog content, these amounts accumulate significantly across years. A hit show could pay residuals to a performer for a decade or longer, making streaming residuals economically distinct from the one-time payments common in previous distribution models.

The subscriber factor represents a structural choice: larger platforms generate more revenue from subscribers and can afford higher residual costs.

Success-Based Bonuses: The $120 Million Fund

The 2023 contract introduced a separate success-based bonus system for shows that reach certain viewership thresholds, backed by a $120 million fund over three years. A show becomes eligible if it achieves views equivalent to 20 percent of the platform’s domestic subscribers in its first 90 days. The union defines “views” as hours watched divided by the episode’s runtime, not the number of unique subscribers who watch. For Netflix, with roughly 75 million domestic subscribers, 20 percent equals about 15 million views. For Disney+, with roughly 46 million domestic subscribers, the threshold is about 9.2 million views.

When a show qualifies, each principal actor receives a bonus payment equal to 100 percent of their fixed residual for that year. However, only 75 percent of that bonus goes directly to the actor. The remaining 25 percent enters a fund jointly controlled by SAG-AFTRA and the studios’ alliance (AMPTP), which distributes those funds to other union members who did not land principal roles. The intent is to share blockbuster success broadly across the membership. On a major platform with a hit show, this can increase an actor’s first-year streaming residual by roughly 75 percent. However, accessing viewership data to confirm eligibility remains a practical challenge: most platforms do not publicly report domestic viewer numbers, and the contract requires studios to share viewership data with the union subject to confidentiality agreements.

Budget Requirements and Eligibility Rules

Not every streaming project qualifies for the full residuals system. High-budget made-for-streaming programs must meet specific minimum production budgets to be eligible for the top residual tier: roughly $2 million for a half-hour program and roughly $3.8 million for an hour-long program. Lower-budget productions, starting around $1.03 million for a half-hour program and $1.75 million for an hour-long program, can see residuals cut by 35 percent. This threshold is designed to ensure that smaller, lower-budget projects can be produced without prohibitive residual costs.

Additionally, the success-based bonus system applies to major streaming platforms such as Amazon, Disney+, Max, Netflix, Paramount+ and Peacock. Smaller or international streaming services may operate under different terms or older agreements.

Production Budgeting for Streaming Residuals

For producers, this means budgeting residuals as an ongoing cost that extends beyond the first year. A streaming budget should include estimated residuals through at least year three; for popular catalog content, potentially indefinitely.

Higher per-episode performer pay increases the residual base up to the applicable ceiling, while lower-budget productions naturally incur smaller residual obligations. For actors and their representatives, streaming residuals now represent a meaningful revenue stream from a single booking, particularly on major platforms or if a show achieves breakout viewership. A performer in a hit series on Netflix could earn residuals indefinitely as long as the platform keeps the show available.

Related coverage: Why Spotify pools all streams into one pot before paying artists; Why Movies Need Two Times Their Budget in Box Office Gross Just to Break Even.

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