Netflix partners with Microsoft on ad-supported subscription plan

Netflix partners with Microsoft on ad-supported subscription plan


The Netflix logo is seen on a TV remote controller, in this illustration taken January 20, 2022.

Dado Ruvic | Reuters

Netflix has named Microsoft as its partner for its ad-supported service, the companies announced Wednesday.

“Microsoft has the proven ability to support all our needs as we together 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 said in a statement.

The “Stranger Things” streamer, which has been struggling to retain and add subscribers, announced in April that it was planning on rolling out an ad-supported tier after years of resisting the move.

Co-CEO Reed Hastings has long been opposed to adding commercials or other promotions to the platform but said during the company’s prerecorded earnings conference call that it “makes a lot of sense” to offer customers a cheaper option.

Read more: Netflix announces ‘Stranger Things’ spinoff

The offering has a lot of profit potential for Netflix as it works to sign up more users. In an effort to lure more subscribers, Netflix has increased its content spend, particularly on originals. To pay for it, the company hiked prices of its service. Netflix said those price changes are helping to bolster revenue but were partially responsible for a loss of 600,000 subscribers in the U.S. and Canada during the most recent quarter.

Netflix has been interviewing potential partners for the past several months, including Google and Comcast, as it prepares to launch the tier before the end of 2022. 

Unlike Google, which owns YouTube, and Comcast, which owns NBCUniversal’s Peacock, Microsoft doesn’t operate a competing streaming service to Netflix.

Peters said the ad-efforts are still in the “very early days,” with “much to work through.”

Netflix is slated to release quarterly earnings Tuesday. It had previously warned it could lose 2 million subscribers during the second quarter. Netflix shares have dropped more than 70% year-to-date.

The new business is a boon for Microsoft’s advertising division, which contributes 6% of the software company’s total revenue.

The Bing search engine, where Microsoft picks up revenue by showing ads in search results, is not as popular as Alphabet’s Google, and in 2015 Microsoft exited the display-ad market as Aol took on that unit.

—CNBC’s Sarah Whitten, Jordan Novet and Alex Sherman contributed to this report.



Source

Lululemon is partnering with the NFL to release apparel for all 32 teams
Business

Lululemon is partnering with the NFL to release apparel for all 32 teams

Sign at the entrance to the Lululemon store in Midtown Manhattan. Erik Mcgregor | Lightrocket | Getty Images Lululemon is partnering with the NFL to launch an apparel collection featuring the logos of all 32 NFL teams. It will mark the first time the retailer has offered officially licensed products for the NFL or any […]

Read More
American Airlines is arriving late to the luxury travel boom. Can it catch up?
Business

American Airlines is arriving late to the luxury travel boom. Can it catch up?

An American Airlines Airbus A321 taxis at San Diego International Airport as a United Airlines airplane departs on August 24, 2024 in San Diego, California. Kevin Carter | Getty Images News | Getty Images FORT WORTH, Texas — American Airlines started pouring customers Champagne Bollinger in its top-tier lounges and cabins this fall. But at […]

Read More
One in three Manhattan condo owners lost money when they sold in the last year
Business

One in three Manhattan condo owners lost money when they sold in the last year

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox. More than a third of the condo apartments sold in Manhattan over roughly the past year sold at a loss, although the top end of […]

Read More