What you need to know
- Netflix has partnered with Microsoft for its ad-supported tier.
- Microsoft will act as its advertising technology and sales partner globally.
- The cheaper subscription plan is expected to launch later this year.
Netflix is definitely coming for its streaming rivals, such as Hulu and HBO Max, with an ad-supported tier, with Microsoft as its commerce partner. The service has teamed up with the software giant as its ad technology and sales partner worldwide.
Microsoft will serve ads on Netflix's cheaper subscription tier through its advertising platform. Advertisers will also have access to Netflix's "audience and premium connected TV inventory."
"Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering," Greg Peters, Netflix's chief operating officer and chief product officer, wrote in a blog post. "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."
This is part of Netflix's efforts to boost revenue in order to make up for the loss of 200,000 subscribers in the first quarter of 2022. It's also considering cracking down on password sharing. Last March, the service announced that it's considering charging members an extra fee to share their password with other household members or friends. The trial feature has since been rolled out in Chile, Costa Rica, and Peru.
For the streaming platform, the partnership grants it access to Microsoft’s vast network of advertising partners.
It's also a win-win situation for Microsoft, as it provides an opportunity to attract more advertisers. However, it wasn't an easy win for the company. Netflix reportedly sought deals with advertising titans like Google and Comcast before settling with the Redmond giant, according to The Wall Street Journal (paywalled).
"This is a big day for Netflix and Microsoft," Mikhail Parakhin, Microsoft's president for web experiences, said in a blog post. "We’re excited to offer new premium value to our ecosystem of marketers and partners while helping Netflix deliver more choice to their customers."
Netflix is battling it out in the streaming war to win more eyeballs on many of the best streaming devices and smart TVs. It remains to be seen, however, whether the upcoming tier will persuade users to sign up for a cheaper streaming experience interrupted by ads.
While the announcement fell short on revealing the upcoming tier's launch, rumors suggest that Netflix will roll out the ad-supported plan later this year.
