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.

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Shonda Rhimes, the high-powered producer behind “Bridgerton” and “Inventing Anna,” is among the many actors, producers and writers who expressed displeasure. NetflixThe decision to include inter-video ads in their own, according to people familiar with the matter.

Rhimes and Intrepid Pictures’ Trevor Macy and Mike Flanagan are among a group of producers who have told Netflix executives they believe the ad is interfering with their storytelling, said the people, who asked not to be named because the discussions are private. Netflix has told the producers that it will not share any revenue from advertising with them, the people said.

Netflix is ​​not the first streamer to have an ad-supported tier. But it used its old hatred of commercialism as a marketing tool to help the country deal with producers. Rhimes signed a multi-year deal with Netflix in 2021 to produce content for the streaming service. When it signed the deal, Netflix had a strict policy not to include advertising in its programming, a long-standing theory of the company and its co-CEO Reed Hastings. Both Rhimes and Netflix declined to comment.

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Netflix rolled out a low-cost ad-supported service in the US and other countries this week. Netflix made the move to offer an ad-supported tier as revenue and subscriber growth increased in line with the end of the global coronavirus pandemic. Netflix has about 223 million subscribers worldwide.

Netflix executives have told producers to thoughtfully place commercials at times that make sense for each episode’s story, according to people familiar with the matter. They also told developers that they don’t expect many people to sign up for the first advertising tier relative to subscribers who will pay without advertising, the people said.

“We’re using our internal tagging teams to find those natural points so we can deliver advertising in a place where it doesn’t,” Netflix chief operating officer Greg Peters said in October.

However, several developers were not happy with the explanation. Strong Pictures produces horror movies and series for Netflix. Those are the worst ad placements because they kill build compatibility. One fifty-minute episode of Intrepid’s “The Haunting of Hill House” is made up of five long, one-shot takes.

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The episode, the series’ sixth (“Two Storms”), is now interrupted by three minute long holiday commercials, made up of three commercials each, in an episode of $690. One of the main reasons for Brave to sign an exclusive deal with Netflix in 2019 was to avoid all commercial advertising, according to people familiar with the company’s thinking. A spokesman for Intrepid declined to comment.

There is no part of the money

Not all creators are upset with Netflix. Ryan Murphy, who signed a 300 million dollar contract with Netflix in 2018, creates his series in three acts, making it easier to insert commercials, according to a person familiar with his work. Scott Frank, the creator of “The Queen’s Gambit,” isn’t complaining either, according to a person familiar with his thinking.

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

Separating revenue from advertising, especially advertising that disrupts the flow of content, may be a way to get rid of angry creators who feel that Netflix has changed the rules midgame. But Netflix isn’t doing that, according to people familiar with the matter. Netflix owns its own original plan and can place ads where and when it wants, giving creators little power other than to complain.

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However, some media and entertainment companies have avoided the issue of disruptive ads or agreed to share revenue in some cases. Warner Bros. DiscoveryHBO Max decided not to include interstitial advertising in the HBO program to address the issue of interference with the popular program. When HBO sold shows to cable networks in a merger, such as when “The Sopranos” aired on A&E, the producers were able to participate in the revenue sharing, according to a person familiar with the matter. A spokeswoman for HBO declined to comment.

Some creators who created content for Disney+ only have the right to participate in the sharing of advertising revenue, depending on the language of the contract, according to a person familiar with the matter. Disney‘s policy. But unlike Netflix, Disney has a cable network that can end up showing Disney+ programming and advertising. A Disney spokesman declined to comment.

– CNBC’s Sarah Whitten contributed to this article.

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