Netflix and Microsoft team up for ad-supported streaming offering

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Netflix has named Microsoft as the tech and sales partner for its first ad-supported subscription offering. 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.

Netflix COO Greg Peters said Microsoft has the proven ability to support all its ad needs as they work together to build a new ad-supported offering. "Microsoft offered the flexibility to innovate over time on both the tech and sales side, as well as strong privacy protections for our members," Peters added. Nonetheless, Peters said the ad-subscription offers are "still in the very early days with much to work through", CNBC said in a report.

Netflix began mulling ad-supported subscriptions in April this year after years of resisting ads on its platform. Co-CEO Reed Hastings previously said during its earnings call that making a cheaper option available to consumers would "make a lot of sense". As much as he is a fan of the simplicity of subscription, Hastings admitted that he is also a fan of consumer choice.

"Allowing consumers who would like to have a lower price and are ad tolerant get what they want makes a lot of sense," he said. According to him previously, the ad-supported plans will most likely roll out over the next year or two.

The shift to ad-supported subscriptions came after Netflix saw a 200,000 dip in subscribers, marking its first decrease in paid subscribers in over a decade. According to CNBC, its shares also dipped more than 25% in extended hours following the earnings report in April.

Mikhail Parakhin, Microsoft's president web experiences, said: "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."

Microsoft currently doesn't own a competing streaming service to Netflix, unlike Google or Comcast which own YouTube and Peacock respectively. In June, Netflix was reportedly in discussions with multiple potential partners to help it break into the ad business.

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