Netflix talks with Google about ads as Sarandos is set to address Cannes this week

Cannes, France-This week, the world’s largest advertising conference will be held here, so it will get all the attention. Netflix Looking for clues on how streaming giants can break away from the ad-free business model and offer cheaper subscriptions for the first time.

Netflix Co-CEO Ted Salandos will conclude the week’s panel with a talk at the Cannes Lions Festival on Thursday. The festival named Salands the “Entertainment Person of the Year” after a two-year hiatus during the pandemic. The “” panel is in the midst of expectations that as inflation forces people to cut costs, the demand for cheaper, ad-supported streaming subscriptions will increase.

Participants are also looking for clues as to who Netflix will partner with to advance into the advertising industry. Netflix will launch rapidly to start selling ads as early as the fourth quarter. Sources told CNBC that Netflix met Google and accounted for the majority of advertising revenue. We also met with Comcast / NBCUniversal and Roku to discuss advertising sales partnerships, as The Information previously reported. NBC Universal and Google declined to comment.

“We’re in the early stages of deciding how to launch an option to support ads at a lower price, and no decision has been made, so this is all speculation at this point,” Netflix said in a statement. rice field.

According to sources who requested anonymity, the company aims to secure marketing partners in the next few months, quickly hire senior managers, form teams and manage relationships with partners. ..

Injecting advertising costs into streaming entertainment is paramount to many festival attendees. In April, Netflix announced that it would offer cheaper ad support options after reporting the loss of subscribers for the first time in the face of intensifying competition in streaming space. Salandos’ talk in Cannes was scheduled before Netflix announced its next move.

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Disney + is also preparing to launch an advertising support service later this year. Paramount + has a hierarchy that supports ads and Pluto that supports free ads. The newly integrated Discovery Warner Brothers is a promising combination of streaming services and Roku is a growing advertising business. CNBC’s parent company, NBC Universal, has already offered a cheaper ad support subscription for the Peacock service.

The company needs to weigh the strengths and weaknesses of each of its potential partners. For example, Google has the advantage of being the world’s largest advertising giant, but despite its recent entry into the field, it has little experience with entertainment content.

Comcast doesn’t have a global reach like Google, but its NBC Universal Unit is a leader in selling ads for its premium TV content. Cable giant’s freewheel advertising technology platform is also used by many media companies and may provide Netflix with a programmatic ad buying tool. In addition, NBC Universal has set a precedent for expanding its partnership with Apple to sell ads and partnering to sell premium content ads on a large scale.

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Another option is Netflix’s longtime partner, Roku, previously spun off from the streaming giant. As the largest TV operating system in the United States, Roku has the advantage of having insights into its size in the United States, Canada and Mexico and trends in ad-supported subscriptions.

Potential partnerships will continue the long history of teaming rivals in the media industry. For example, as a content distributor and entertainment company, Comcast has regular distribution agreements with NBCUniversal’s rivals. Roku has also partnered with a streaming app to TKKT to offer its own free ad support alternative on the Roku channel.

Netflix stakes are high. Inventories have fallen by almost 50% since warning of a shrinking subscriber base. Providing cheaper ad support services is one way to prevent continued cancellations when people are trying to reduce costs, but Netflix needs to ensure that the advertising experience doesn’t disappoint viewers. I have.

Disclosure: CNBC is owned by Comcast’s NBC Universal.