Netflix has lost a key arbitration case against the Writers Guild of America East, and the streaming company will now have to pay $42 million in additional residuals to 216 screenwriters on 139 of its movie projects. 

The case centered around the 2018 horror film The Bird Box, which still ranks as Netflix's third most popular film of all time. Screenwriter Eric Heisserer wrote the film based on Josh Malerman's eponymous novel, and Sandra Bullock starred in the movie as a survivor of an alien invasion that renders mere eye sight a deadly human liability. 

A third-party arbitrator found Netflix's "self-dealing" as producer and distributor of The Bird Box resulted in an underpayment of $850,000 to the movie's writers based on WGA contracts. The writers were also awarded an additional $350,000 in unpaid interest. 

As a result of the ruling, WGA East officials said, Netflix must now compensate hundreds of other writers on its film projects with tens of million of dollars more in residuals. WGA also said it's going to also seek an additional $13.5 million for these scribes in unpaid interest. 

Netflix argued that it should pay writers based on "minimum basic agreement" guidelines established with the Directors Guild of America and the Screen Actors Guild. But the arbitrator ruled that the WGA contracts called for compensation based on the same "cost plus" formula it plies to films produced by third-party production companies. Cost plus bases the film's value at slightly more than its budget. 

“During the arbitration, the Guild showed that when Netflix licensed comparable theatrical films from third party producers it almost always paid a license fee that exceeded the budget," WGA told its members. "The industry refers to this model as ‘cost-plus.’ The Guild argued that Netflix must apply this cost-plus model to its own films and impute license fees in excess of the budget for the purpose of paying residuals. The arbitrator agreed and ruled that the license fee should be 111% of the gross budget of the film.”

Netflix said its new action movie Red Notice drew 277.9 million viewing hours on its global platform from Nov. 12-21, putting it on pace to easily surpass the first-28-days performance of the streaming service's most successful English-language movie release of all time, 2018 sci-fi drama Bird Box.

Starring Sandra Bullock in a scary alien-invasion story concept, Bird Box drew just over 282 million hours of watching back in December 2018 - January 2019, when the platform had around 140 million subscribers globally. Netflix ended September of this year with around 214 million paid users. 

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The data comes courtesy of Netflix's new "Global Top 10" website, which was just updated Tuesday to detail the most popular films and TV shows on Netflix from Nov. 15-21. Netflix also included the all-time top English language list below in the ranker this week:

Directed by Rawson Marshall Thurber (Dodgeball: A True Underdog Story), Red Notice stars Dwayne Johnson, Ryan Reynolds and Gal Gadot in USA Network-lite, globally situated caper drama, infused with top-shelf production values. 

Yes, Red Notice has been accused of being somewhat formulaic, right down to the rather exhausting-by-now re-use of the Beastie Boys' "Sabotage" in its soundtrack. 

And the 35% score on critic-reviews aggregation site Rotten Tomatoes probably tells you something about Red Notice's box office potential. But Netflix, which offers easy-to-watch Red Notice in its vast all-you-can-view smorgasbord, isn't playing that kind of checkers anymore. 

By traditional media standards, the amount of sheer viewer engagement being generated by Netflix content these days is hard to imagine. 

For example, Netflix's Korean-language series sensation Squid Game recently earned the distinction of having the most watched first-28-day debut of any kind of show, film or series, with 1.65 billion global viewing hours. Comparing series to movies is a bit apples-and-oranges when the metric is viewing time--Squid Game watchers binged through nine 55-minute Season 1 episodes, many of them multiple times. Red Notice watchers just saw one two-hour movie. 

In any event, Red Notice has performed so well with audiences globally, according to Netflix, that it uplifted other action movies in the Netflix catalog starring the film's talent.

Central Intelligence, a similarly tongue-in-cheek 2016 comedy-action film pairing Dwayne Johnson with comedian Kevin Hart, drew 14.91 million viewing hours on Netflix, ranking it in Netflix's 10 most watched English-language films for Nov. 15-21. Similarly, 2019 Netflix action flick 6 Underground, starring Reynolds and directed by action movie maven Michael Bay, also finished in the English-language movie top 10 with 7.77 million viewing hours on platform.

Of course, Red Notice was easily the top ranked English language film title on Netflix last week, garnering 129.1 million of its global viewing hours from Nov. 15-21. The film debuted on Netflix on Nov. 12. 

As far as English-language TV shows, season 1 of Netflix's collaboration with Riot Games, Arcane, drew just over 38.4 million viewing hours to finish No. 1. The second-season debut of Tiger King, meanwhile, finished No. 2 with just over 30 million viewing hours.

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Famously taciturn in regard to its viewer performance data for individual shows on its platform, Netflix was downright loquacious during its fourth-quarter earnings call Thursday.

Technically, Netflix started giving out this data last month, when it disclosed viewership for “Bird Box." Offering an update, Netflix said the horror movie starring Sandra Bullock has now been seen by 80 million subscribing households worldwide.

Doing some admittedly imprecise math in MCN’s Los Angeles-based laboratory, we multiplied the average size of a U.S. household (2.6 people, according to U.S. Census figures) times 80 million, then we multiplied that figure by what the Motion Picture Association of America says is the average price of a U.S. movie ticket ($8.97).

Our rough calculation is that “Bird Box” would have generated around $1.86 billion if its release was directly translated into a theatrical one.

Now, this admittedly crude exercise doesn’t account for the fact that much of that audience of 80 million households is international. And we concede that it is also very apples to oranges—deciding to select something to watch in the Netflix UI is a much different proposition than driving to a movie theater and buying a ticket. But the this little mathematical exercise does have some value in revealing the audience’s scale.

It's big!

Beyond continuing to update the rather extraordinary performance of “Bird Box,” Netflix also revealed rare insight to other originals produced for its site:

> Spanish-language series “Elite” was seen by 20 million subscribing households globally in the first four weeks after its October 5 debut.

> Greg Berlanti and Sera Gamble’s creepy romantic drama series “You” was watched by an estimated 40 million Netflix households in the first four weeks after its September 9 launch.

> Netflix also projects that “Sex Education,” which stars Gillian Anderson and just premiered in the U.K. on Jan. 11, will similarly deliver around 40 million household views in its first four weeks.

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“I would look at it like these are less financial metrics as they are cultural metric.” said Netflix CFO Spence Neumann. “So that what does it mean when 80 million households watch ‘Bird Box’? Well, culturally it means exactly the same thing as 80 million plus people buying a movie ticket to seeing it or 80 million households watching a TV show. So culturally, it’s meaningfully out there.”

For the quarter, Netflix said it added 7.6 million users worldwide, and around 1.6 million in the U.S. 

Netflix took to social media Wednesday to warn its subscribers not to hurt themselves walking around with blindfolds like the characters portrayed in its horror-themed original movie Bird Box.

In an afternoon tweet, the streaming service asked customers not to participate in the now viral #BirdBoxChallenge, in which people don blindfolds and try to complete tasks often depicted in the film. The challenge is based on Bird Box star Sandra Bullock’s character, who, along with her children, navigate treacherous and scary terrain blindfolded in an effort to avoid an entity that causes people to kill themselves if seen.

[embed]https://twitter.com/netflix/status/1080525103593512962[/embed]

Since its Dec. 21 debut, the film has inspired memes and videos in which people film themselves doing many of the tasks depicted in the movie.

According to Netflix, Bird Box was watched by more than 45 million Netflix accounts in the first seven days since its launch. The added publicity surrounding the Bird Box Challenge will most likely build more interest for the movie in the long run. 

[embed]https://twitter.com/NetflixFilm/status/1078735051406204928[/embed]