Netflix accelerates advertising preparations

Reports suggest Netflix is in talks with studios to change its licensing and production agreements with firms like Warner, Universal, and Sony as the streaming service’s plans to run advertising throw up new challenges.

Why it matters

Since Netflix confirmed its advertising plans, the shape of the company’s offer has fascinated the industry. Sticky, popular content plus high-quality data on a logged-in, paying audience is a hugely compelling proposition. With these indications of success, it appears that studios understand their opportunity to do better out of this necessary negotiation.

Yet, what it points to is that the plans are in train, as the target of Q4 for an ad-tier debut approaches.

What’s going on

According to reporting in the Wall Street Journal, Netflix is now negotiating the necessary agreements, which will be essential to running an ad-supported service.

• The problem is that these are likely to increase Netflix’s costs, with insiders telling the Journal that studios will be after a premium of 15% to 30% more than they are currently paid.
• It’s not the first time the streaming giant has needed to amend deals in-flight. When it allowed device downloads, studios claimed increased payments.

Sourced from The Wall Street Journal, WARC