WSJ News Exclusive | NBCUniversal, Google Compete to Help Netflix Develop Ad-Backed Tier

A partnership with NBCUniversal would likely be exclusive, the people familiar with the matter said. 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 U.S. and Europe, the people said.

A partnership with NBCUniversal would likely involve revenue-sharing, and one issue might be whether Netflix would be guaranteed a certain amount of revenue, they said.

Linda Yaccarino,

chairman of global advertising and partnerships for NBCUniversal, would be a major player in such a partnership.

Google brings to the table its own ad-serving technology and experience in video through YouTube and its online channel bundle, YouTube TV, people close to the discussions said. Google already has a commercial relationship with Netflix, which is a customer of its ad-buying tools, they said. It is likely Google would also pursue an exclusive arrangement.

“We are still in the early days of deciding how to launch a lower-priced, ad-supported option and no decisions have been made,” a Netflix representative said.

Roku Inc.

ROKU 2.37%

has also had early talks with Netflix about ad partnerships, the people familiar with the matter said. The Information previously reported that Netflix talked to Comcast and Roku about getting help on technical infrastructure or ad sales.

In April, when Netflix announced its first quarterly subscriber loss in more than a decade, the company said it would move toward putting ads into its service, something co-Chief Executive

Reed Hastings

had long resisted.

The shift in strategy was a sign that competition from rival streaming services, and the end of a pandemic-fueled surge in growth, was weighing on Netflix and forcing it to rethink its approach. An ad-supported tier would be more affordable and could help boost revenue and subscriptions.

Forming partnerships with big competitors such as Google or NBCUniversal, and outsourcing technical infrastructure and ad sales, could help Netflix move faster to bring an ad-supported version of its service to market. Several ad-industry executives estimated that it would take at least a year for Netflix to roll out ads across the service globally, though others said Netflix could begin testing ads in some markets much sooner.

The major competitors Netflix is considering each have experience in supporting other companies’ ad-sales efforts. NBCUniversal has been the exclusive reseller of ads for Apple News and Apple Stocks in the U.S. since 2017, and recently said it expanded its relationship to include the U.K. NBCUniversal would give Netflix open access to its ad-tech partners, one of the people familiar with the matter said.

Google began helping

Walt Disney Co.

, which had been a FreeWheel customer, serve ads across video, smartphones and desktops in late 2018.

Netflix also is exploring potential tie-ups with ad-tech companies that could funnel demand from advertisers for automated placements in the streaming service, the people familiar with the matter said.

The Trade Desk

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is one ad-tech firm that has discussed a partnership with Netflix in this realm, they said. DoubleVerify, a firm that helps advertisers measure how campaigns performed, also has talked to Netflix, a person familiar with the situation said.

Ad-industry executives who have had discussions with Netflix say the company hasn’t provided details of its plans, such as how many ads the company will run for each hour of programming and whether the company aims to offer targeted, personalized ads or mainly focus on the potential for advertisers to reach its user base of 222 million paying subscribers.

—Suzanne Vranica contributed to this article.

Write to Sarah Krouse at sarah.krouse+1@wsj.com, Patience Haggin at patience.haggin@wsj.com and Lillian Rizzo at Lillian.Rizzo@wsj.com