In a hot pursuit to broaden its ad division, Microsoft announced a new partnership with Netflix to power the streaming giant’s very first ad-supported subscription offering.
In June of 2022, Ted Sarandos, Co-CEO of Netflix confirmed that the company planned to introduce an ad-supported tier after Netflix posted its quarterly figures that showed a loss of 200,000 subscribers. As part of Netflix’s maneuver to win back lost subscribers and potentially gain more, the company designed this new tier with affordability as its central value offering.
COO of Netflix, Greg Peters, announced on Wednesday that Microsoft was selected as the company’s “global advertising and sales partner” since Microsoft has proven the ability to support the company’s advertising and privacy protection needs.
Microsoft’s blog announcement shared that it is looking forward to working with marketers to bring ads to the Netflix community. Marketers looking to Microsoft for advertising needs will have exclusive offers such as gaining access to the Netflix audience and premium connection to TV inventory. All ads served on Netflix will also be exclusively available through the Microsoft platform. Furthermore, Netflix’s endorsement of Microsoft’s approach to privacy protection enhances the company’s vision of protecting user data.
The million-dollar question is, will a partnership with Microsoft and a new ad tier redeem Netflix of its user decline crisis? Although Netflix’s rivals have been successful at implementing their own ad-supported service tiers, it is yet to be determined whether Netflix will pull it off. More importantly, it is unclear whether this strategy truly addresses the underlying issues causing the subscriber rate dip at Netflix.
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