Netflix names Microsoft as partner for new consumer ad-supported subscription plan

Microsoft has today been appointed Netflix’s global technology and sales partner to help power its first ad-supported subscription offering.

At launch, consumers will have more options to access Netflix’s content, and marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory.

All ads served on Netflix will be exclusively available through the Microsoft platform. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information.

Both companies are saying they will offer new “premium value to our ecosystem of marketers and partners while helping Netflix deliver more choice to their customers.”

In a statement, Netflix COO, Greg Peters said: “In April we announced that we would introduce a new lower-priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard, and premium plans. Today we are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner.

“Microsoft has the proven ability to support all our advertising needs as we build a new ad-supported offering together. 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.

“It’s very early days and we have much to work through. But our long-term goal is clear: More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We’re excited to work with Microsoft as we bring this new service to life.”

Mumbrella has reached out for local comments from Netflix and Microsoft.

In April, during the company’s quarterly earnings call in the US, the CEO of Netflix said the company is open to an advertising-supported subscription model in the near future after years of rejecting calls for an ad-supported streaming tier.

“One way to increase the price spread is advertising on lower priced plans. Those who have been following Netflix know that I have been against the complexity of advertising and a fan of the simplicity of subscription,” said Hastings. “But I’m a bigger fan of consumer choice and allowing consumers who would like to have a lower price and are advertising tolerant get what they want.”

Hastings added: “The online ad market has advanced and you don’t have to incorporate all the information about people that you used to. We can be a great publisher and have other people do all of the fancy ad-matching and integrate all the data so we can stay out of that and be focused on our members and create a good experience.”

Netflix said it ended the first quarter with 200,000 fewer subscribers than it had in the fourth, missing its own projection of adding 2.5 million customers in the period. As it stands, Netflix has 221.64 million global subscribers.

The company blamed password sharing among its members and increased streaming competition for pressuring revenue growth

And revenue was below expectations at $US7.868 billion (A$ 10.601 billion) for the three-month period.

Last year, new research conducted by global technology company Criteo revealed 56% of Australians are happy to watch ads on video streaming services if it means they save money.

A quarter of Australians (24%) said they are open to watching ads if they didn’t have to pay the subscription fee for video streaming services.

The research also cited that “one-in-five Australians (20%) are willing to share their data with advertisers to receive more relevant and personalised video ads,” with Australia’s top five favourite streaming services in Australia being Netflix (74%), YouTube (53%), 7Plus (44%), ABC iView (36%) and Disney+ (33%).


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