American streaming giant, Netflix, has partnered with multinational tech corporation, Microsoft, for its first-ever ad-supported subscription option.
Netflix, which was initially opposed to the idea of running ads on its service, has decided to incorporate them into a separate subscription offering in a bid to attract more subscribers.
The streaming platform lost more than 200,000 subscribers in the first three months of 2022, falling extremely short of its target for the first quarter. This was the first time the platform lost subscribers rather than gained in over a decade.
After that, the company also forecasted that its subscribers would fall by another 2 million in the current quarter to about 219.6 million after the first quarter decline.
It is in the interest of combatting this that the company has partnered with Microsoft in a bid to retain users and sign up new ones.
Netflix COO, Greg Peters, said although the partnership is still in the early stages, Microsoft had proven its ability to support all its advertising needs.
“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.
“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,” he said.
Also speaking on the partnership, the President of Web Experiences at Microsoft, Mikhail Parakhin, said the company was thrilled to partner with Netflix and offer new premium value to its ecosystem of marketers and partners.
“We’re thrilled to be named Netflix’s technology and sales partner to help power their 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 have access to 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.
“This is a big day for Netflix and Microsoft. We’re excited to offer new premium value to our ecosystem of marketers and partners while helping Netflix deliver more choice to their customers,” he said.
Prior to the announcement, Netflix has been interviewing potential partners for the last few months, including Google and Comcast, in view of its plans to launch the new tier before the end of the year.