The Netflix logo is seen on a television remote control, in this illustration taken on January 20, 2022.
Given Ruvic | Reuters
Netflix has named Microsoft As your partner for your ad-supported service, the companies announced on Wednesday.
“Microsoft has the proven ability to meet all of our needs as we build a new ad-supported offering together. More importantly, Microsoft offered the flexibility to innovate over time in both technology and sales, as well as strong privacy protections.” for our members, Netflix COO Greg Peters said in a statement.
The “Stranger Things” streamer, which has been struggling to retain and add subscribers, announced in April that it planned to implement an ad-supported level after years of resisting the move.
Co-CEO Reed Hastings has long opposed adding commercials or other promotions to the platform, but said during the company’s pre-recorded earnings conference call that “It makes a lot of sense“to offer customers a cheaper option.
Read more: Netflix Announces ‘Stranger Things’ Spinoff
The offer has great earning potential for Netflix as it works to sign up more users. In an effort to attract more subscribers, Netflix has increased its spending on content, particularly originals. To pay for it, the company raised the prices of its service. Netflix said those price changes are helping to boost revenue, but were partially responsible for the loss of 600,000 subscribers in the US and Canada during the year. most recent quarter.
Netflix has been interviewing potential partners for the past several months, including Google Y Comcastas it prepares to release the level before the end of 2022.
Unlike Google, which owns YouTube, and Comcast, which owns NBCUniversal’s Peacock, Microsoft doesn’t operate a streaming service that competes with Netflix.
Peters said the publicity efforts are still in “early days,” with “a lot of work to do.”
Netflix is scheduled to release quarterly earnings on Tuesday. It had previously warned that it could lose 2 million subscribers during the second quarter. Netflix shares are down more than 70% so far this year.
The new business is a boon for Microsoft’s advertising division, which contributes 6% of the software company’s total revenue.
Search engine Bing, where Microsoft makes money by displaying ads in search results, isn’t as popular as Alphabet’s Google, and in 2015 Microsoft exited the display ad market when Aol took over that unit.
NCNBC’s Sarah Whitten, Jordan Novet and Alex Sherman contributed to this report.
