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 Ann | Patrick McMillan | Getty Images

Shonda Rhimes, the high-powered producer behind “Bridgerton” and “Inventing Anna,” is among several showrunners, creators and writers who have expressed displeasure with Netflixdecided to include mid-video ads in its content, according to people familiar with the matter.

Trevor Macy and Mike Flanagan of Rhimes and Intrepid Pictures are among a group of creators who have told Netflix executives they believe the ads are interfering with their story, said the people, who ask not to be named as the discussions are private. Netflix has told creators it will not share advertising revenue with them, the people said.

Netflix isn’t the first streamer to have an ad-supported tier. But he has used his previous hostility to ads as a marketing tool to help land deals with creators. Rhimes signed a multi-year deal with Netflix in 2021 to produce content exclusively for the streaming service. When she entered the deal, Netflix had a firm policy of not including advertising in its programming, a long-standing tenet of co-founder and co-CEO Reed Hastings. Both Rhimes and Netflix declined to comment.

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Netflix rolled out a lower-priced ad-supported service in the US and other countries this week. Netflix made the decision to offer an ad-supported tier because revenue and subscriber growth have increased to coincide with the end of the global coronavirus pandemic. Netflix has approximately 223 million global subscribers.

Netflix executives have told creators that they have thoughtfully placed mid-roll ads at times that make sense with each episode’s story, according to people familiar with the matter. They have also told creators that they don’t expect many people to sign up for the basic ad tier compared to subscribers who don’t pay for ads, the people said.

“We’re essentially using our internal content tagging teams to find those natural breakpoints so we can deliver the ad with the least amount of fuss,” Netflix chief executive Greg Peters said in the October.

However, several creators have not been happy with the explanations. Intrepid Pictures makes horror films and series for Netflix. These are especially bad for ad placements because they kill build tension. One 50-minute episode of Intrepid’s “The Haunting of Hill House” consists of five long, single scenes.

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That program, the sixth series (“Two Storms”), is now interrupted by three one-minute commercial breaks, consisting of three commercials each, in the $6.99 series. One of the main reasons Intrepid signed an exclusive deal with Netflix in 2019 was that the streamer avoided advertising altogether, according to people familiar with the company’s thinking. A spokesman for Intrepid declined to comment.

No income sharing

Not all creators are upset with Netflix. Ryan Murphy, who signed a $300 million deal with Netflix in 2018, crafts the episodes of his series in three acts, leading to an easy advertising situation, according to a person familiar with his work. Scott Frank, co-creator of “The Queen’s Gambit”, also has not complained, according to a person familiar with his views.

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

Sharing revenue from advertising, especially ads that interrupt the flow of a story, could be an outlet for irritated creators who feel that Netflix has changed the rules mid-season. game But Netflix won’t do that, according to people familiar with the matter. Netflix owns its original programming and can insert ads wherever it wants, giving creators little leverage other than raising objections.

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However, other media and entertainment companies have avoided the issue of infringing ads or agreed to share revenue in some cases. Warner Bros. foundHBO Max decided not to include midroll advertising in HBO programming to avoid the issue of interrupting popular programs. When HBO sold shows to serial cable networks in syndication, such as when “The Sopranos” aired on A&E, creators were able to participate in revenue sharing, according to a person familiar with the matter. familiar with the matter. An HBO spokeswoman declined to comment.

Some creators who made content exclusively for Disney + have rights to participate in advertising revenue sharing, according to contractual language, according to a person familiar with it. Disneytheir policies. But unlike Netflix, Disney has serial cable networks that may broadcast Disney+ programs with commercials. A Disney spokeswoman declined to comment.

– CNBC Sarah Whitten contributed to this article.

WATCH: Netflix launches ad-based subscription plan

Netflix launches ad-based subscription plan

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