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.

Presley N | Patrick McMullan | Getty Images

Shonda Rhimes, the high-powered producer behind “Bridgerton” and “The Invention,” is among a number of showrunners, creators and writers who have expressed displeasure. Netflixdecision to include interstitial video ads in their content, according to people familiar with the matter.

Rhimes and Intrepid Pictures’ Trevor Massey and Mike Flanagan are among a group of creators who have told Netflix executives they believe the ads are interfering with their storytelling, said the people, who asked not to be identified because That discussions are private. Netflix has told creators it won’t share any revenue from advertising with them, the people said.

Netflix isn’t the first streamer to have an ad-supported tier. But it used its previous aversion to advertising as a marketing tool to help land deals with developers. Rhimes signed a multi-year deal with Netflix in 2021 to create content exclusively for the streaming service. When she signed the deal, Netflix had a strict policy of not including advertising in its programming, a longstanding principle of co-founder and co-CEO Reed Hastings. Both Rhimes and Netflix declined to comment.

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Netflix launched the low-cost ad-supported service in the US and other countries this week. Netflix decided to offer ad-supported tiers as revenue and subscriber growth coincided with the end of the global coronavirus pandemic. Netflix has around 223 million global subscribers.

Netflix executives have told producers that they thoughtfully place interstitial ads at intervals that make sense with each episode’s storyline, according to people familiar with the matter. They’ve also told developers they don’t expect more people to sign up for the basic ad tier than consumers who pay for no ads, the people said.

“We use our internal content tagging teams to find these natural breaks so we can serve the ad with minimal disruption,” Netflix chief operating officer Greg Peters said in October.

Still, most manufacturers aren’t happy with the details. Intrepid Pictures makes horror movies and series for Netflix. These are particularly bad fits for insert ads because they kill the build of the push. A 50-minute episode of Intrepid’s “The Hill House Haunting” consists of five long, single-shot takes.

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The episode, the sixth in the series (“Two Storms”), was now interrupted by three one-minute long commercial breaks, each consisting of three commercials at a rate of $6.99. One of the main reasons Intrepid signed an exclusive general agreement with Netflix in 2019 was to completely block advertising from the streamer, according to people familiar with the company’s thinking. A spokesperson for Intrepid declined to comment.

No income share

Not all creators are upset with Netflix. Ryan Murphy, who signed a $300 million deal with Netflix in 2018, has made episodes of his series into three acts, which makes for easier ad placement, according to a person familiar with the work. . Scott Frank, co-creator of “The Queen’s Gambit,” also hasn’t complained, according to a person familiar with his thinking.

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

Dividing revenue from advertising, especially commercials that interrupt the flow of storytelling, could be a way to appease disgruntled creators who feel Netflix changed the rules mid-game. But Netflix won’t do that, according to people familiar with the matter. Netflix has its own original programming and can insert ads where and when it wants, giving creators a little leverage without voicing complaints.

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

Some creators who create content exclusively for Disney+ also have the right to participate in ad revenue sharing, depending on the language of the agreement, according to one of the people. DisneyThe policy. But unlike Netflix, Disney owns a linear cable network that could eventually air Disney+ programming with commercials. A Disney spokesman declined to comment.

– CNBC Sarah Whiten contributed to this article.

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