Netflix is partnering with Microsoft for its upcoming ad-supported streaming tier, the company announced Wednesday† The streaming service says Microsoft will become its “global ad technology and sales partner” in rolling out the cheaper option.
“It’s still very early and we have a lot to go through,” Netflix COO Greg Peters wrote in the post. “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 partner with Microsoft to bring this new service to life.”
We are pleased that Netflix has chosen Microsoft as its advertising technology and sales partner. We want publishers to have more viable long-term monetization platforms so that more people can access the content they love, wherever they are. https://t.co/QmPszxJTOf
— Satya Nadella (@satyanadella) July 13, 2022
In a post on Microsoft’s blog, the company says marketers will work with Microsoft to bring ads to the Netflix ecosystem. “Today’s announcement also endorses Microsoft’s approach to privacy, which is based on protecting customers’ information,” said Mikhail Parakhin, president of web experiences at Microsoft. Outside of Netflix, Microsoft is also reportedly in the process of bringing ads to free-to-play Xbox games.
The Wall Street Journal reports, citing anonymous sources, that Netflix chose Microsoft over a partner for at least two main reasons. Unlike Comcast and Google, two other companies reportedly in the running to help build ads, Microsoft doesn’t have its own video service that competes with Netflix. Late last year, Microsoft also acquired Xandr from AT&T when telecom broke up its media stack. Xandr is an advertising technology company that aims to build technology for a “post-cookie” world.
Netflix first hinted at a cheaper ad-supported tier in May and later confirmed the possibility last month. While Netflix hasn’t announced an official date for the level’s rollout, it’s rumored to be available to customers by the end of 2022. WSJ reports that an option under consideration is a cheaper ad-supported version for each of the three tiers Netflix currently offers.
News about Netflix’s ad-supported level came after the company announced a decline in its subscriber base for the first quarter in a decade, reaching a global high of 222 million. The company is also exploring live streaming and ways to curb password sharing to mitigate subscriber and revenue declines.
Opting for Microsoft recalls a close relationship between the two for streaming launches. The first version of Watch Instantly to primarily stream B-movies used Microsoft’s Silverlight technology to deliver video instead of the more common Flash Player until it was replaced by HTML5, and the Xbox 360 became the first console with an HD Netflix streaming app.
Revelation: The edge recently produced a series with Netflix.
Update July 14, 2:20 PM ET: Additional information from the Wall Street Journal.