Hollywood Digital Divide: $71 M in 2011*

Yesterday we gave our best-guess estimate on the chasm between the Hollywood writers and the studios on digital media. Given the tiny size of the digital pot in 2007, it’s a pittance — about $7.2 million.

But the writers aren’t worried about today’s dollars. They’re worried about missing out on an Internet boom, much as they missed out on the DVD boom of the last 10 years. Four years from now, for instance, we estimate about the gap between what the writers want and what the studios are offering could grow to $124 million.

We got those numbers based on projections from Adams Research, which estimates that downloads of TV and film will grow to $4.1 billion by 2011, and Hollywood’s share of the online video advertising market will grow to $1.7 billion.

Again, the estimates do not include many pieces of the digital pie for which the writers would like to be paid, including banner ads, subscription fees, or any digital revenue derived from guild-produced TV and film — that is, video created solely for the Web, and not related to existing TV shows or movies. If the writers get their way on all of those streams as well, the gap would grow even further.

The maths:

Studio proposal:
Downloads: $8.1m (0.3% of 2011 est. download wholesale market of $ 2.7 billion, using DVD residuals formula.)
Streaming video advertising:  $20.4 million (1.2% of Hollywood-related streaming ad revenue est $1.7 billion for 2011)
$28.5 million

Writer’s Proposal:
Downloads: $67.5 million (2.5% of digital download wholesale)
Streaming video advertising: $42.5 million (2.5% of Hollywood-related streaming ad revenue est $1.7 billion for 2011)
$100 million

Total gap: $71 million

* Figures here updated on Nov. 15 to correct 2011 download revenue split under the WGA proposal. We took total download revenue instead of the industry-standard 2/3 wholesale, which reduced the gap between the WGA and the studios to $71 million from $124 million.

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