Netflix has announced that it will partner with Microsoft as it prepares to launch an ad-supported subscription tier on its platform.
The streaming giant has spent the past three months ramping up its plan to add a cheaper ad-supported subscription tier, and has met with the likes of Google, Roku and Universal’s parent company Comcast as part of its quest for one. partner in this process. . It is now resolved at Microsoft.
announcing the move (opens in new tab)Microsoft described itself as “Netflix’s sales and technology partner” and revealed that “Marketers who turn to Microsoft for their advertising needs will have access to Netflix audiences and premium connected TV inventory. All ads served on Netflix will be available exclusively through the Microsoft platform.”
Netflix COO Greg Peters said: “Microsoft has the proven ability to support all of our advertising needs as we create together a new ad-supported offering as well as strong privacy protections for our members. .”
No release date yet
The announcement did not specify a date when the new tier might launch, or even outline an ambition, with Peters adding: “It’s too early and we have a lot to work on. But our long-term goal is clear: more choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We are excited to be working with Microsoft as we bring this new service to life.”
The process of launching an ad-supported tier for Netflix was carried out at lightning speed. In early March, the streamer’s CFO Spencer Neumann was asked about the prospect of an ad-supported tier, and he only said that he “could never say never”, before quickly adding that it was “not something in [the brand’s] plans now.”
Cut to late June, Netflix co-CEO Ted Sarandos confirmed that an ad-supported tier is coming and explained that the streaming giant needed to attract a new range of customers, adding, “We left a large segment of customers off the table, which are the people who say, ‘hey, Netflix is too expensive for me and I don’t mind advertising. We’re adding an ad tier, we’re not adding ads to Netflix as you know it today. We’re adding a tier ads for people who say, ‘hey, I want a lower price and I’ll watch ads’”.
As we said above, there is no release date yet for this new subscription tier, but if previous reports are accurate, it will be before the end of 2022.
Analysis: Why can’t Netflix build its own platform?
Simply put, there’s no time. Netflix needs more money and it needs it now.
In the same onstage interview in which he confirmed plans for an ad-supported tier, Sarandos confirmed that Netflix execs have the ambition to build the streamers’ own platform, saying “…control over it so we can.”
But developing, building, testing and launching a bespoke advertising platform for a streaming service available in 190 countries can take years of work. Netflix doesn’t have that time.
Netflix is looking to boost revenue after it was announced in late April that it had lost 200,000 subscribers since the start of 2022 and, as a result, has seen its value drop by more than $70 billion.
Its next update in subscriber numbers is scheduled for next week and another drop – in the region of two million – is anticipated. If the company’s subscriber numbers continue to fall, its stock price will continue to fall.
Netflix shares peaked at just over $700 in November 2021 but are currently at $176.56. Anything the company can do to reverse that slump and attract new investors will be welcome – and the partnership with Microsoft, a truly worldwide proposition with an advertising platform that can fit directly into Netflix’s streaming operation, looks like walkover.
Now it’s just a case of how fast the two companies can launch it.