Comcast’s NBCUniversal subsidiary and Google are the “top contenders” to serve advertisements on Netflix when the streaming service rolls out its planned ad-supported tier, The Wall Street Journal reported on Wednesday. Netflix “is still in the early stages of developing the strategy and has explored a range of tie-ups in recent weeks,” the WSJ wrote, citing people familiar with the matter.
A deal with NBCUniversal would likely mean that “Comcast’s video ad unit, FreeWheel, would supply technology to help serve up ads, while NBCUniversal’s ad-sales team would help sell ads in the US and Europe,” the report said. The Alphabet-owned Google, of course, has plenty of experience serving ads, including on its own YouTube and YouTube TV video platforms. Netflix already uses Google’s ad-buying tools.
A deal with either NBCUniversal or Google would likely be exclusive, the WSJ report said. Comcast/NBCUniversal and Google aren’t the only contenders, as “Roku has also had early talks with Netflix about ad partnerships,” the report said. The Information reported last week that Netflix executives recently “met with representatives of both Roku and Comcast to discuss arrangements under which those companies would handle either the ad sales or the technical infrastructure for Netflix’s forthcoming ad-supported tier of service.”
Netflix “is looking to start doing some pre-roll ads, which run before a show starts, in the fourth quarter,” The Information report said. Netflix is also negotiating with entertainment companies to put ads into shows that Netflix doesn’t create itself. Licensing TV shows and movies for both ad-free and ad-supported streaming will cost Netflix about 20 percent more than for ad-free streaming alone, The Information report said.
A Netflix spokesperson told both the WSJ and The Information that the company is “still in the early days of deciding how to launch a lower-priced, ad-supported option, and no decisions have been made.”
Netflix resisted ads for years
After many years of resisting ads, Netflix CEO Reed Hastings announced the plan for an ad-supported tier in April. Netflix’s stock price dropped 35 percent the day of that announcement, and Netflix revenue growth has been slowing amid a loss in subscribers.
Netflix says it will continue offering ad-free streaming alongside a cheaper ad-free option. Netflix prices in the US currently range from $9.99 to $19.99 a month.
While Hastings initially said an ad-supported tier is something “we’re trying to figure out over the next year or two,” Netflix subsequently told employees that it plans to roll out the ad-supported tier by the end of this year.
Netflix will reportedly widely roll out an extra fee for sharing accounts with people in other households around the same time. That fee is already being charged in Chile, Costa Rica, and Peru, but not in the rest of the 190 or so countries where Netflix offers streaming.