Netflix Seeks to Rework Programming Deals With Hollywood Studios for Ad-Supported Tier: Report

Netflix is looking to tweak its programming deals with Hollywood studios to enable the streaming pioneer’s launch of an advertising-supported version of its service, The Wall Street Journal reported on Tuesday.

The company has started talks with Warner Bros., Universal, and Sony Pictures Television, the report said, citing people familiar with the matter.

It will also need to renegotiate agreements for older television shows such as Breaking Bad from Sony and NCIS from Paramount Global, according to the report.

Netflix told Reuters it is still in the early days of deciding how to launch a lower priced, ad-supported option, and added that it is all just speculation at this point.

Warner Bros., Universal, and Sony did not immediately respond to Reuters requests for comment.

Earlier in June, co-CEO Ted Sarandos said Netflix is in talks with several companies for advertising partnerships.

After losing subscribers for the first time in a decade and projecting a 2 million decline in the upcoming quarter, Netflix said in April it was considering the launch of a lower-priced tier with advertising.

Netflix’s most formidable challenger – Walt Disney’s Disney+ – has also said it would introduce an ad-supported tier, as the pandemic boom in streaming fades, competition tightens and rising inflation pinches consumer spending on entertainment.

Back in April, Netflix offered a gloomy prediction for the spring quarter, forecasting it would lose 2 million subscribers, despite the return of such hotly anticipated series as Stranger Things and Ozark and the debut of the film The Grey Man, starring Chris Evans and Ryan Gosling.

The company said it lost 200,000 subscribers in its first quarter, falling well short of its forecast of adding 2.5 million subscribers. Suspending service in Russia after the Ukraine invasion took a toll, resulting in the loss of 700,000 members. The announcement sent Netflix’s stock tumbling 26 percent and erased about $40 billion (roughly Rs. 3,05,320 crore) of its stock market value at the time.