Netflix will partner with Microsoft in this new advertising subscription plan, the two companies announced Wednesday.
The association follows the startling announcement in April that Netflix (NFLX) would be open to adding a lower level of advertising support to its service, something its CEO Reed Hastings resisted for years. But the company is going through one of the toughest periods in its 25-year history, after losing subscribers in the first quarter for the first time in more than a decade. The timing of the launch of the ad level has not been formally announced, but the New York Times reported in May that Netflix told employees it could reach the end of 2022.
Netflix said Wednesday that the move is “in very early days” and that the company has “a lot to work on” when it comes to introducing an ad level to its 221.6 million subscribers worldwide.
Microsoft’s formidable ad sales unit will bring this new level to life. Greg Peters, chief operating officer and chief product officer of Netflix, said Wednesday in a statement that “Microsoft offered the flexibility to innovate” in both technology and sales, as well as promising strong privacy protections for Netflix members .
“Netflix’s long-term goal is clear: more options for consumers and a premium TV brand experience and better than linear for advertisers,” he added.
In April, Netflix reported that it lost 200,000 subscribers in the first quarter of 2022 and expects to lose 2 million more in the second quarter. This news caused a drop in stocks and scared investors not only for the future of Netflix, but especially the streaming business in general.
Netflix reports second-quarter earnings on Tuesday and all eyes will be on their subscription numbers.