Streaming giant Netflix will work with Microsoft to launch a cheaper subscription plan that includes advertisements to attract more customers.

This is after the streaming platform lost subscribers for the very first time in a decade and after years of resisting the idea of running ads.

After years of amassing subscribers, Netflix lost 200,000 customers worldwide in the first quarter of the year, which sent its shares plunging. They then decided to announce the arrival of advertising on the service, with the aim of financing the investments necessary to maintain its top position in the streaming industry.

In this partnership, Microsoft will be responsible for designing and managing the platform for advertisers who want to serve ads to Netflix users. Microsoft said that advertisers will have access to the Netflix audience and premium connected TV inventory. Landing the ad deal with a video streaming service that boasts more than 220 million subscribers represents a major coup for Microsoft, which has been engaged in a long-running and often acrimonious battle for the past 20 years with Google. But the deal wasn’t really a shocker as Netflix’s co-founder and co-CEO, Reed Hastings, served on Microsoft’s board of directors from 2007 to 2012 and Microsoft President Brad Smith has also served on Netflix’s board since 2015.

This ad-supported subscription will be in addition to the three options already available and costs PHP 560 ($10) per month, the cheapest of all options. Adding advertising means Netflix will expose itself to some thorny issues, including debates around consumers’ personal data being harvested on a massive scale to target them with more lucrative, personalized pitches.

Chief Operating Officer Greg Peters said that Netflix chose Microsoft because of its ability to innovate as well as for its strong privacy protections. This also indicates that it would get tougher to share logins and passwords, which allows many people to not pay to access the platform’s content.

Netflix joins a few of its rivals in offering ad-supported services, including Walt Disney Co’s Hulu, NBCUniversal’s Peacock and Warner Brothers Discovery’s HBO Max. Disney also plans to introduce a version of Disney+ with commercials.

Source: https://about.netflix.com/en/news/netflix-partners-with-microsoft, https://blogs.microsoft.com/blog/2022/07/13/netflix-names-microsoft-as-partner-for-new-consumer-subscription-plan/