Microsoft has been selected as Netflix’s technology and sales partner to help power its first ad-supported subscription offering. At launch, consumers will have more options to access Netflix’s award-winning content. Marketers looking to Microsoft for their advertising needs will access the Netflix audience and premium connected TV inventory. All ads served on Netflix will be exclusively available through the Microsoft platform. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information.
Netflix has been interviewing potential partners for the past several months, including Google and Comcast, as it prepares to launch the tier before the end of 2022. Unlike Google, which owns YouTube, and Comcast, which owns NBCUniversal’s Peacock, Microsoft doesn’t operate a competing streaming service to Netflix. “In April, we announced that we will introduce a new lower-priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard, and premium plans. Today we are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner. Microsoft has the proven ability to support all our advertising needs as we together build a new ad-supported offering. More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members,” Greg Peters, Netflix COO, said.
Netflix’s new offer has much profit potential as it works to sign up more users. In an effort to lure more subscribers, Netflix has increased its content spend, particularly on originals. To pay for it, the company hiked the prices of its service. Netflix said those price changes are helping to bolster revenue but were partially responsible for a loss of 600,000 subscribers in the U.S. and Canada during the most recent quarter. “It’s very early days, and we have much to work through. But our long-term goal is clear: More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We’re excited to work with Microsoft as we bring this new service to life,” Peters added.
Netflix, which has been struggling to retain and add subscribers, announced in April that it was planning on rolling out an ad-supported tier after years of resisting the move. Co-CEO Reed Hastings has long been opposed to adding commercials or other promotions to the platform but said during the company’s prerecorded earnings conference call that it “makes a lot of sense” to offer customers a cheaper option.