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Report: Netflix to Rollout Ad-Tier Without Some Popular Content as Negotiations with Studios Stall

David Satin

Netflix’s race to the finish line with its new ad-supported plan is nearly complete. The company’s new Basic with ads plan launches tomorrow, No.v 3, but new subscribers may notice their favorite show is not available upon launch.

That’s because Netflix is still in negotiation with some of the biggest studios in Hollywood to allow content that it licenses from those studios to be shown with ads, according to the Wall Street Journal. Netflix has been in negotiations with these studios since the summer, but its haste to get its ad-supported tier to market before Disney+ launches its ad-tier on Dec. 8 has put the streaming giant in a bit of a time-crunch.

The WSJ’s reporting indicates that Netflix has not yet finalized licensing agreements with Disney, NBCUniversal, Sony Pictures Television, Warner Bros. Discovery, or Lionsgate, with WBD being the studio closest to an agreement. That means that popular shows like “Breaking Bad,” “Grey's Anatomy,” “You” and “Cobra Kai” will essentially be behind a paywall when the new plan with ads goes live.

The sticking point, as always between companies of this size, is money. Netflix reportedly asked for a much higher rate from advertising companies than networks usually get to run ads next to their programming. The company denies asking for exorbitant fees, but if it did, it would certainly explain why major studios are asking for a bigger slice of the pie.

In fact, studio partners may request anywhere from 15% to 30% premiums on top of their current contracts to allow the streamer to feature their content on an ad-supported video-on-demand (AVOD) tier. These numbers fall in line with the 20% additional fees Netflix was required to pay after allowing subscribers to download content on its more expensive tiers.

Industry analysts suggest that Netflix could see up to $600 million in additional revenue from its AVOD plan in its first year alone, so studios will likely be unreceptive if Netflix is trying to lowball them. The company also added 2.4 million new subscribers in the third quarter, bringing its global total to 223 million. With that many paying customers, Netflix will likely end up having to bite the bullet in meeting studio demands for more money, especially considering that they are up against a deadline of the streamer’s own making.

Netflix

Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.

Netflix offers four plans — on 1 device in SD with their “Basic with Ads” (US$ 6.99) plan, on 1 device in SD with their “Basic” (US$ 9.99) plan, on 2 devices in HD with their “Standard” (US$ 15.49) plan, and 4 devices in up to 4K on their “Premium” (US$ 19.99) plan.

Netflix spends more money on content than any other streaming service meaning that you get more value for the monthly fee.

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