Platform losses subscribers while lagging behind competitors in appealing to consumers who are strapped for cash
Netflix has partnered with Microsoft to launch a cheaper subscription plan showing adverts to appeal to cash-strapped consumers seeking to cut back on costs.
The streaming platform announced plans to launch a cheaper service – giving subscribers the chance to pay less in return for viewing ads – in April after reporting the first loss of subscribers in a decade, wiping almost $60bn (£51bn) off its market value.
Greg Peters, the Netflix chief operating officer, 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.”
Netflix’s surprise moves to belatedly follow rivals such as Hulu, HBO Max, and Paramount+ by launching an ad-supported package this year is expected to precede the announcement next week of a further loss of 2 million global subscribers in the three months to the end of June.
“It’s very early days and we have much to work through,” Peters said. “But our long-term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers.”
Netflix had reportedly been in talks with a number of partners to deliver advertising sales, including Google, and Sky owner Comcast’s NBCUniversal, before signing up with Microsoft.
Netflix has for years been steadfastly against introducing advertising, despite the combination of a cheaper pay element and ad income often making such plans more lucrative than pricier ad-free subscriptions. The company’s co-founder Reed Hastings said they would “exploit” and disrupt the viewer experience.
Disney is also preparing to introduce an ad-supported tier for Disney+ in late 2022 and internationally next year.
