Netflix Picks Microsoft to Power its First Ad-Supported Streaming Tier

Netflix hero

Netflix has announced it has partnered with Microsoft as its global technology and sales partner for its first ever ad-supported subscription streaming offering.

“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,” said Greg Peters, Chief Operating Officer and Chief Product Officer, Netflix.

“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,” added Peters.

Last month, Netflix co-CEO Ted Sarandos said at the Cannes Lion Film Festival an ad-supported tier would help the company maximize its reach.

“We’ve left a big customer segment off the table, which is people who say: ‘Hey, Netflix is too expensive for me and I don’t mind advertising,’” Sarandos told Sway podcast host Kara Swisher at the festival.

Microsoft said on Wednesday, “at launch, consumers will have more options to access Netflix’s award-winning content. Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information,” according to Mikhail Parakhin, President Web Experiences, Microsoft.

“This is a big day for Netflix and Microsoft. We’re excited to offer new premium value to our ecosystem of marketers and partners while helping Netflix deliver more choice to their customers,” added Parakhin.

Back in April, Netflix saw its first subscriber loss in over 10 years, which sent its shares sinking 25% at the time.

Yesterday, the Wall Street Journal reported Netflix was looking to renegotiate deals with Hollywood studios, to show ads next to popular shows. Studios are said to be asking a premium of 15-30% over existing deals for Netflix to show ads during their premium shows.