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Netflix names Microsoft as technology partner for ad-supported offering

"Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering," said Netflix COO Greg Peters

Netflix will work with Microsoft on its much discussed new advertising-supported streaming service.

It’s thought Netflix’s decision to work with the tech giant will enable it to launch the new ad-supported tier relatively quickly without having to set up the extensive and expensive tech and sales infrastructure needed for ad-supported streaming.

Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering,” said Netflix COO Greg Peters.

“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,” added Peters. “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 a blog post, Mikhail Parakhin, president web experiences, Microsoft, said all ads served on Netflix will be exclusively available through the Microsoft platform.

“Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory,” he added.

Netflix finally admitted it would look at an advertising-supported platform earlier this year as it began to see global subscription numbers drop.

Initially the company’s co-CEO Reed Hastings said it would explore the idea over the “next year or two”, however, as audiences’ income has been squeezed and SVoD services have seen the number of new and existing subscriptions drop, it seems Netflix has expedited its plans.

With both Netflix and Disney Plus planning on launching ad-supported options, analysts have predicted the two companies could generate over $1 billion in revenue each.

Last month, MoffettNathanson suggested Netflix’s ad-supported tier could cost $6 per month in the United States, or $4 less than its lowest-cost ad-free tier. The analysts said they expects that by 2025, Netflix will have 15 million subscribers for its ad-supported tier in the US, and 75.6 million subs overall.