Series creators on Netflix are pushing for increased compensation following the introduction of an ad-supported subscription tier by the streaming giant in November last year.
Changing Compensation Dynamics
Jeremy Zimmer, head of the United Talent Agency, emphasized that the introduction of ads on Netflix “changes the game” in terms of how the platform should remunerate creative talent. He argues that shows generating high viewership and attracting more advertisers should result in additional revenue flowing to the creators.
Netflix’s Ad-Supported Plan
Netflix rolled out its “Basic with Ads” subscription plan on November 3, 2022, priced at $6.99 per month, significantly lower than the ad-free subscription tiers ranging from $9.99 to $19.99 per month. Reports indicate that approximately 9 percent of Netflix subscribers in the US have opted for this new ad-supported plan.
Motivation Behind Ad Integration
The introduction of an ad-supported service by Netflix aims to counteract the slowdown in subscriber growth. While the company has historically resisted profit-sharing agreements with creative agencies, the emergence of advertising revenue has prompted a reconsideration of compensation structures.
Shift in Revenue Streams
Zimmer highlights that the previous compensation rules were established within the context of an ad-free platform. With the introduction of ads, there’s now an additional revenue stream that creators believe should be factored into their compensation.
Subscriber Response
Reports from analytics firm Antenna indicate that, despite the availability of the “Basic with Ads” plan, only a minimal fraction (0.1 percent) of existing US subscribers migrated to this tier in November. This suggests that while some users are willing to accept ads for a discounted subscription, the majority still prefer an ad-free experience.
As negotiations unfold between Netflix and series creators, the integration of advertising into the streaming platform’s business model is poised to reshape the dynamics of compensation within the industry.
