Shonda Rhimes among creators unhappy with Netflix mid-video ads, sources say

Shonda Rhimes, the powerhouse producer behind ‘Bridgerton’ and ‘Inventing Anna,’ is among a number of showrunners, creators and writers who have expressed their displeasure netflixto include mid-video ads in their 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 ads interrupt their storytelling, the people said, who asked not to be named because discussions are private. Netflix told the creators it wouldn’t share any advertising revenue with them, the people said.

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

Netflix this week launched a low-cost ad-supported service in the United States and other countries. Netflix made the decision to offer an ad-supported tier as revenue and subscriber growth plateaued, coinciding with the end of the global coronavirus pandemic. Netflix has approximately 223 million subscribers worldwide.

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

“We use our in-house content tagging teams basically to find those natural stopping points so we can deliver the ad at the least distracting point,” Netflix chief operating officer Greg Peters said in October.

However, several creators were not satisfied with the explanations. Intrepid Pictures makes horror films and series for Netflix. These are particularly bad for ad insertions because they kill building tension. A 50-minute episode of Intrepid’s “The Haunting of Hill House” is five long takes in one shot.

This episode, the sixth in the series (“Two Storms”), is now interrupted by three one-minute commercial breaks, consisting of three commercials each, at the $6.99 level. One of the main reasons Intrepid signed an exclusive global deal with Netflix in 2019 was the streamer’s complete avoidance of advertising, according to people familiar with the company’s thinking. A spokesperson for Intrepid declined to comment.

Not all creators are unhappy with Netflix. Ryan Murphy, who signed a $300 million deal with Netflix in 2018, designs his series’ episodes in three acts, which makes ad placement easier, according to a person familiar with his work. Scott Frank, co-creator of “The Queen’s Gambit,” also had no complaints, according to a person familiar with his thinking.

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

Sharing advertising revenue, especially ads that interrupt the flow of storytelling, could be a way to appease irritated creators who think Netflix changed the rules mid-game. But Netflix won’t, according to people familiar with the matter. Netflix owns its original programming and can insert ads wherever and whenever it chooses, giving creators little influence other than airing complaints.

Yet other media and entertainment companies have avoided the issue of interrupted ads or agreed to revenue sharing in some cases. Discovery of Warner Bros.HBO Max decided not to include mid-roll advertising in HBO’s programming to circumvent the issue of prestige programming being discontinued. When HBO sold shows to linear 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. A spokesperson for HBO declined to comment.

According to someone familiar with disneythe policies of. But unlike Netflix, Disney has linear cable networks that could potentially air Disney+ programming with ads. A Disney spokesperson declined to comment.

–CNBC Sarah Whiteten contributed to this article.

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