Netflix partners with Microsoft for upcoming ad-supported subscription plan

Netflix announced on July 14 that it has selected Microsoft as its global advertising technology and sales partner for its upcoming ad-supported streaming tier as the company looks to revive its subscriber growth amid rising competition.

"Microsoft has the proven ability to support all our advertising needs as we work together to 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" Netflix Chief Operating Officer and Chief Product Officer Greg Peters said in a statement.

Netflix had first disclosed its intentions to introduce a low-cost ad-supported tier in April 2022, a major departure from the company's earlier stance against advertising on the platform. This will be in addition to its existing ad-free tiers.

The move came in the backdrop of the service posting its first quarterly subscriber loss in more than a decade in April 2022. Netflix said it lost 200,000 subscribers during the first quarter of 2022, the first time it has witnessed a subscriber drop since 2011.

The company also projected that it will lose another 2 million subscribers in the second quarter. It had 221.64 million members at the end of March 31, 2022.

While the company had initially stated that they will try to experiment with an ad-supported offering "over the next year or two", it has since then accelerated this rollout and plans to introduce it by the end of this year.

"We are adding an ad tier; we're not adding ads to Netflix as you know it today. We're adding an ad tier for folks who say, ‘Hey, I want a lower price and I'll watch ads.'" Netflix co-CEO Ted Sarandos told prominent tech reporter Kara Swisher at the Cannes Lions advertising festival last month, adding that they had "left a big customer segment off the table" until now.

Mikhail Parakhin, President-Web Experiences, Microsoft said in a blogpost that ads served on Netflix will be exclusively available through the Microsoft platform and marketers will have access to the Netflix audience and premium connected television inventory.

"We want publishers to have more long-term viable ad monetization platforms, so more people can access the content they love wherever they are," Microsoft CEO Satya Nadella said on Twitter.

Microsoft had reported more than $10 billion in advertising revenue last year and had completed the acquisition of a programmatic advertising marketplace Xandr from AT&T last month.

Several of Netflix's rivals in India including Disney+ Hotstar, Zee5, Voot and MX Player already offer an ad-supported tier to consumers. Amazon also provides an ad-supported streaming service miniTV within its flagship shopping app in India.