By Nathalie Voit
Streaming giant Netflix is partnering with Microsoft to launch its first-ever, ad-supported subscription plan for consumers.
In an announcement on its website on July 13, Netflix confirmed it had selected Microsoft as its global advertising technology and sales partner for its new ad-friendly subscription tier.
“Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering. 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,” Netflix COO Greg Peters wrote in the release.
Netflix said the new lower-priced subscription plan is part of its long-term goal of expanding consumer choice and providing more services to existing members.
For years, Netflix had been resistant to the very idea of running ads on its platform. However, following the company’s disappointing first-quarter financial results released in April, company executives conceded that its one-size-fits-all approach to streaming had neglected a large segment of its potential customer pool.
Netflix co-CEO Reed Hastings acknowledged this in a transcript of the company’s first-quarter earnings call:
“One way to increase the price spread is advertising on low-end plans and to have lower prices with advertising. Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription. But as much as I’m a fan of that, I’m a bigger fan of consumer choice,” he said.
Netflix has yet to announce a launch date, but the option is expected to roll out within the next year or so, according to a copy of the Q1 earnings call.
