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Major Agency Wants Profit Deals From Netflix Advertising

(Photo Credit: Stock Catalog/Flickr)
(Photo Credit: Stock Catalog/Flickr)

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Netflix’s turn to advertising was supposed to ensure a safer financial future, but the streaming giant evidently forgot to factor in the industry’s apex predators: agents.

Jeremy Zimmer, CEO of major Hollywood agency United Talent Agency which reps huge celebrities including Kevin Hart and Charlize Theron, let drop in an interview to the Financial Times on Monday that Netflix’s new ad-supported business should mean his clients get bigger chunks of a show’s profits.

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Netflix’s fortunes have faded since the heady days of 2013, when it hit the streaming world with a bang in the form of House of Cards and Orange Is The New Black. By adopting the uncommon strategy of offering creatives upfront payments rather than strike deals based on the success of their shows, Netflix attracted writers and showrunners who were eager to see their work realized, even if that meant missing out on earnings if their show turned out to be a hit.

In November the company turned to a business strategy it had long eschewed: advertising. Netflix introduced a new ad-supported subscription option for $6.99 per month, over 50% cheaper than its previous $15.50 plan. The idea is to boost subscriber numbers, which fell for the first time in April 2022, while keeping revenue ticking higher. For agencies, however, it’s a chance to re-negotiate their relationship with streamers:

  • Zimmer told The FT that by adding an ad-supported tier Netflix had “changed all the rules,” adding: “There’s a different revenue stream coming in that they had said wasn’t going to be there.” He argued that hit shows would attract more advertisers, which should translate to bigger payouts for UTA’s clients.
  • The addition of advertising-supported tiers to Netflix and other streamers (e.g. Disney+) means their data will become more public via Nielsen Ratings, giving extra leverage to agents hunting down better deals for their clients.

The British Aren’t Coming: Global macroeconomics certainly aren’t helping Netflix’s quest to add subscribers. British research from analyst firm Ampere Analysis estimates Netflix lost half a million subscribers in the UK alone in 2022, and that the cost of living crisis there will lead to a further loss of 200,000 this year. Recapturing those subscribers would take a miracle — or possibly another Harry and Meghan documentary…