Shonda Rhimes, other creators unhappy with Netflix’s new mid-video ads

Shonda Rhimes attends the 2018 Vanity Fair Oscar Party on March 4, 2018 in Beverly Hills, CA.

Presleyan | Patrick McMullan | Getty Images

Shonda Rhimes, the formidable producer behind “Bridgeton” and “Inventing Anna,” is one of many showrunners, creators and writers who have NetflixThe company decided to include in-between video ads in its content, according to people familiar with the matter.

Trevor Macy and Mike Flanagan of Rhimes and Intrepid Pictures, a group of creators, told Netflix executives they believed the ads interrupted their storytelling, people familiar with the matter said. They asked not to be named because the discussions were private. Netflix has told creators it won’t share any ad revenue with them, the people said.

Netflix isn’t the first streamer to have an ad-supported tier. But it used its previous distaste for advertising as a marketing tool to help seal deals with creators. Rhimes signed a multi-year deal with Netflix in 2021 to produce content exclusively for the streaming service. When she signed the deal, Netflix had a firm policy of not including ads on its shows, a longstanding tenet of co-founder and co-CEO Reed Hastings. Rhimes and Netflix both declined to comment.

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Netflix this week released a lower-priced ad-supported service in the U.S. and other countries. With revenue and subscriber growth stabilizing as the global coronavirus pandemic ends, Netflix has decided to offer an ad-supported tier. Netflix has approximately 223 million global subscribers.

Netflix executives have told creators that they have carefully placed in-stream commercials at intervals that fit the storyline of each episode, according to people familiar with the matter. They also told creators they didn’t want many people signing up for the basic ad tier relative to subscribers who didn’t pay for ads, the people said.

“We’re using our internal content tagging team to find those natural breakpoints so we can place ads in the least visible places,” Greg Peters, Netflix’s head of operations, said in October.

Still, some creators aren’t happy with these explanations. Intrepid Pictures produces horror films and series for Netflix. These are particularly inappropriate for ad insertion as they take away the tension of the building. A 50-minute episode of Intrepid’s “Haunting of Hill House” consists of five long takes.

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The sixth episode of the series (“Two Storms”) is now interrupted by three one-minute-long ad breaks, each consisting of three commercials, priced at $6.99. One of the main reasons Intrepid signed an exclusive overall deal with Netflix in 2019 was that the streamer avoided ads entirely, according to people familiar with the company’s thinking. A spokesman for Intrepid declined to comment.

no revenue share

Not all creators are unhappy with Netflix. Ryan Murphy, who signed a $300 million contract with Netflix in 2018, made his series into three acts to easily run ads, according to a person familiar with his work. “The Queen’s Tactics” co-creator Scott Frank also had no complaints, according to a person familiar with his thinking.

The Directors Guild of America and the Writers Guild of America declined to comment for this story.

Splitting ad revenue, especially those that interrupt the flow of a story, could be a way to appease angry creators who think Netflix is ​​a game-changer. But Netflix won’t do that, according to people familiar with the matter. Netflix has its own original programming that inserts ads where and when it’s needed, and creators have little leverage beyond expressing complaints.

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Still, other media and entertainment companies have avoided the problem of intrusive advertising, or in some cases agreed to share revenue. Warner Bros DiscoveryHBO Max has decided not to include mid-air commercials on HBO shows to circumvent the disruption of prestige programming. When HBO sells shows to linear cable networks in syndication, such as when “The Sopranos” airs on A&E, creators are able to participate in revenue sharing, according to a person familiar with the matter. An HBO spokesman declined to comment.

Some creators who make content exclusively for Disney+ are also entitled to a share of ad revenue, depending on the language of the contract, according to people familiar with the matter. disneypolicy. But unlike Netflix, Disney has a linear cable network that can eventually stream Disney+ shows with ads. A Disney spokesman declined to comment.

– CNBC’s Sarah Whitten contributed to this article.

Watch: Netflix launches ad-based subscription plan

Netflix launches ad-based subscription plan


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