Shonda Rhimes attended the 2018 Vanity Fair Oscar Party on March 4, 2018 in Beverly Hills, California.
Presley Ann | Patrick McMullan | Getty Images
Shonda Rhimes, the lead producer behind “Bridgerton” and “Inventing Anna,” is among a number of software makers, creators, and writers who have expressed their displeasure with the NetflixIsrael’s decision to include mid-video ads in its content, according to people familiar with the matter.
The people, who asked not to be named because the discussions are private, said Rhimes and Intrepid Pictures are among a group of creators who have told Netflix executives they believe ads interrupt their storytelling. People said Netflix told the creators it wouldn’t share any advertising revenue with them.
Netflix isn’t the first streaming device to have an ad-supported layer. But she has used her past aversion to commercials as a marketing tool to help get deals with creators. Rhimes signed a multi-year deal with Netflix in 2021 to create content exclusively for the streaming service. When the deal was signed, Netflix had a consistent policy of not including ads on its programming, a longstanding principle from co-founder and co-CEO Reed Hastings. Rhimes and Netflix declined to comment.
Netflix released a lower-priced ad-supported service in the US and other countries this week. Netflix made the decision to introduce an ad-supported category as revenue and subscriber growth stalled with the end of the global coronavirus pandemic. Netflix has around 223 million global subscribers.
Netflix executives told creators they carefully placed in-run ads at intervals that fit the story of each episode, according to people familiar with the matter. They also said they told the creators they didn’t expect as many people to sign up for the primary ad tier compared to subscribers who wouldn’t pay for any commercials, people said.
“We primarily use our internal content tagging teams to find these natural breakpoints so we can deliver advertising at the least intrusion point,” Netflix chief operating officer Greg Peters said in October.
However, many creators were not pleased with the explanations. Intrepid Pictures makes horror movies and series for Netflix. These spells are particularly bad for ad entries because they eliminate construction tension. One 50-minute episode of “The Haunting of Hill House” by Intrepid consists of five long, one-shot clips.
That sixth episode of the series (“Two Storms”), is now interrupted by three one-minute commercial breaks, consisting of three ads each, in the $6.99 category. One of the main reasons Intrepid signed an exclusive package deal with Netflix in 2019 was because the operator completely avoided advertising, according to people familiar with the company’s thinking. An Intrepid spokesperson declined to comment.
No revenue share
Not all creators of Netflix are upset. Ryan Murphy, who signed $300 million with Netflix in 2018, has crafted episodes of his series into three acts, making it easy to place ads, according to a person familiar with his work. Scott Frank, co-creator of the Queen’s Gambit, also didn’t complain, 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 revenue from advertising, especially commercials that disrupt the flow of storytelling, may be a way to appease angry content creators who feel Netflix has changed the rules in the middle of the game. But Netflix won’t, according to people familiar with the matter. Netflix has its own original programming and can insert ads wherever and whenever you want, giving content creators little leverage other than voicing complaints.
However, other media and entertainment companies have avoided the issue of spotty ads or agreed to share revenue in some cases. Discover Warner Bros.HBO Max has decided not to include in-run ads in HBO programming to avoid the premium programming interruption issue. When HBO sold shows to linear cable networks in merchandising, such as when “The Sopranos” aired on A&E, the creators were able to co-share revenue, according to a person familiar with the matter. An HBO spokesperson declined to comment.
Some creators who made content exclusive to Disney+ also have rights to share ad revenue, depending on contractual language, according to a person familiar with the matter. DisneyPolicies. But unlike Netflix, Disney has linear cable networks that can eventually stream Disney+ shows with commercials. A Disney spokesperson declined to comment.
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