Netflix said the new ad-supported tier will be an addition to its existing plans and will offer more choice for consumers with a ‘TV brand experience for advertisers’.
Netflix has partnered with Microsoft to offer a cheaper subscription option that shows advertisements.
The streaming giant said the new tier will be an addition to its existing ad-free basic, standard and premium plans. The company said Microsoft was chosen as its global advertising technology and sales partner, due to the “proven ability” and flexibility the tech giant offers.
“It’s very early days and we have much to work through.” Netflix COO Greg Peters said in a blog post. “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.”
The partnership means all ads on Netflix will be exclusively available through the Microsoft platform. Microsoft said marketers will now have access to the Netflix audience and “premium connected TV inventory”. The tech giant said the announcement also endorses its approach to privacy, which is “built on protecting customers’ information”.
Speaking on the partnership, Microsoft chair and CEO Satya Nadella said on Twitter: “We want publishers to have more long-term viable ad monetisation platforms, so more people can access the content they love wherever they are.”
Netflix first hinted at the possibility of an ad-based subscription tier in April, after it reported a loss of around 200,000 subscribers in the first quarter of the year. The streaming giant previously predicted a net addition of 2.5m subscribers for the quarter, which had still underwhelmed shareholders.
In an earnings call that month, Netflix co-CEO Reed Hastings said the company was “open” to add lower-priced subscription tiers with ads, despite the company resisting adverts for years.
The streaming giant previously said account sharing is making it “harder to grow membership in many markets”. It estimated that from 222m paying households, its service is being shared to roughly another 100m homes.
The company has also been reacting to a growing number of players in the streaming market, with the launches of Disney+ in 2019, HBO Max in 2020 and Paramount+ in 2021.
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