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For Netflix, the partnership will bring more customers. Meanwhile, Microsoft will enhance its advertising division as well as endorse the company’s approach to privacy.
The leading subscription streaming service and production company Netflix Inc (NASDAQ: NFLX) has chosen tech giant Microsoft Corporation (NASDAQ: MSFT) as a partner for its new ad-supported subscription offering. According to the announcement by Netflix, Microsoft will act as its global advertising technology and sales partner, innovating over time on both the technology and sales side, as well as strong privacy protections for Netflix customers.
The new service will be a cheaper addition to the existing plans on Netflix, which do not include adverts.
Netflix COO Greg Peters said:
“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.”
In turn, Mikhail Parakhin, President of Web Experiences at Microsoft, stated that the service will offer new premium value to Microsoft’s ecosystem of marketers and partners while allowing Netflix to provide more options to their customers.
Within the collaboration, Netflix will offer its consumers more options to access its content. Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience of as many as 221.6 million subscribers and premium connected TV inventory. Besides, all the advertisement content on Netflix will be exclusively available through the Microsoft platform.
The deal will benefit both parties. For Netflix, it will bring more customers. Meanwhile, Microsoft will enhance its advertising division as well as endorse the company’s approach to privacy.
Netflix Recovering Its Subscribers’ Base
In April, Netflix expected to add 2.7 million users. However, instead, it reported its first loss of 200,000 subscribers in more than a decade. The reasons for that were numerous. Firstly, following the start of the war in Ukraine, Netflix joined hundreds of companies worldwide and stopped its activity in Russia. Secondly, it increased its subscription prices in Canada and the US. As a result of the new costs, many subscribers canceled their Netflix accounts. Further, account sharing on Netflix has been a significant issue for long. As the company estimates, about 100 million households worldwide, with 30 million of those in the US and Canada, are using the service without paying for it
Amid the losses and financial troubles caused by the subscription cancellations, Netflix decided to cut losses, laying off employees and offering a cheaper ad-supported subscription tier. The partnership with Microsoft is a part of its recovery strategy.