Netflix partners with Microsoft to partner with subscription packages with ads : Netflix has partnered with Microsoft for subscription packages accompanied by advertisements as an effort to increase subscriber growth, which had slowed down.
The subscription package will be much cheaper than the premium subscription package without ads that are currently offered.
Reuters reported on Thursday, Netflix revealed plans to bring more affordable subscription plans in April 2022.
The announcement comes as the company that pioneered the subscription service posted its first customer loss in more than a decade, and projected deeper losses to come.
Netflix Chief Operating Officer Greg Peters said in a blog post that Netflix chose Microsoft for its ability to innovate, as well as for its strong privacy protections.
"It's still very early days and we have a lot of things to work on. But our long term goal is clear. More choice for consumers and a better than linear premium TV brand experience for advertisers,” said Greg Peters.
Microsoft is expected to join the partnership to strengthen Netflix ad sales.
The software giant made $10 billion in advertising revenue last year, selling ads across services such as search engine Bing and the business-focused social network LinkedIn.
Last month, Microsoft completed the acquisition of AT&T Inc.'s online advertising platform Xandr Inc., which allows advertisers to buy ad space across thousands of websites and target audiences.
The partnership is also getting stronger given the position of Microsoft President Brad Smith who has also been on Netflix's board since 2015.
The partnership announcement comes ahead of Netflix's second-quarter earnings report.
The company had told investors that it could lose as many as 2 million subscribers in that period, although the return of popular series like “Stranger Things” managed to break viewership records.
Netflix joins a number of its competitors in offering ad-supported services, including Hulu Walt Disney Co, Peacock NBCUniversal, and HBO Max Warner Brothers Discovery.
Disney also plans to introduce a Disney+ version with ads.
Comscore Inc researcher James Muldrow said the ad-supported service saw a faster rate of adoption than subscription services, due to inflation being experienced by consumers.
“The time is right for subscription-based streaming services like Netflix to consider ad-supported services so that they continue to grow their growth,” said James.