The Netflix logo is seen on the remote control of a TV, in this illustration taken on January 20, 2022.
Donat Ruvic | Reuters
Netflix has named Microsoft as its advertising service partner, the companies announced Wednesday.
“Microsoft has the proven ability to support all of our needs as we create a new offering of advertising support together. Most importantly, Microsoft offered the flexibility to innovate over time in both technology and sales, as well. as strong privacy protections for our members. “Netflix chief operating officer Greg Peters said in a statement.
Streamer “Stranger Things,” which has been struggling to retain and add subscribers, announced in April that it planned to roll out a tier with advertising support after years of resisting the move.
Co-CEO Reed Hastings has long opposed adding ads or other promotions to the platform, but said during the company’s pre-recorded earnings conference call that it “makes a lot of sense” to offer customers one more option. cheap.
Read more: Netflix announces spin-off of ‘Stranger Things’
The offer has great potential for Netflix, as it works to register more users. In an effort to attract more subscribers, Netflix has increased its spending on content, especially originals. To pay for it, the company raised the prices of its service. Netflix said these price changes are helping increase revenue, but were partly responsible for the loss of 600,000 subscribers in the U.S. and Canada during the most recent quarter.
Netflix has been interviewing potential partners over the past few months, including Google and Comcast, as it prepares to launch the level before the end of 2022.
Unlike Google, which owns YouTube, and Comcast, which owns NBCUniversal’s Peacock, Microsoft does not operate any streaming services that compete with Netflix.
Peters said advertising efforts are still in the “early days,” with “a lot to work on.”
Netflix is scheduled to release its quarterly earnings on Tuesday. He had previously warned that he could lose 2 million subscribers during the second quarter. Netflix shares have fallen more than 70% to date.
The new business is an aid to Microsoft’s advertising division, which contributes 6% of the software company’s total revenue.
The Bing search engine, where Microsoft earns revenue by displaying ads in search results, is not as popular as Google’s Alphabet, and in 2015 Microsoft left the display ad market when Aol took over this unit.
– Sarah Whitten, Jordan Novet and CNBC’s Alex Sherman contributed to this report.