Yesterday Microsoft announced that it is entering a new partnership – it has been chosen as the advertising platform for Netflix.
Back in April, Netflix announced that it was going to offer an ad-based subscription model, to try and grow its revenue, and Microsoft has been selected to help deliver that.
In 2018, Netflix owned 49.1% of the total US OTT (over-the-top/internet) subscription revenue but that is expected to fall to just 29.3% by the end of 2022. This means that Netflix has had to consider other revenue streams, and serving ads is the obvious choice.
Despite NBCUniversal and Google being favoured to get the gig, it is quite surprising that Microsoft has come out with the deal. Chairman and CEO of Microsoft Corporation, Satya Nadella tweeted:
We’re thrilled Netflix has selected Microsoft as its advertising technology and sales partner. We want publishers to have more long-term viable ad monetization platforms, so more people can access the content they love wherever they are. https://t.co/QmPszxJTOf
— Satya Nadella (@satyanadella) July 13, 2022
Greg Peter from Netflix said, “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.“
There hasn’t been much said about the partnership yet or when ads will start appearing on Netflix. And it looks like they will only appear to users that opt for a lower-priced subscription plan. Those that have existing basic, standard and premium plans can continue to watch their favourite shows, without the interruption of ad content.
This is also a big move for Microsoft as it plugs the gap in its network. It provides a quality streaming service and access to the Netflix audience and premium connected TV inventory for its advertisers, which could result in more brands choosing to spend their advertising budget with Microsoft.
Microsoft says, “All ads served on Netflix will be exclusively available through the Microsoft platform. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information.”