According to Netflix, the company has “much to work through” when it comes to introducing an ad tier to its 221.6 million subscribers globally. They’ve announced that they’ve been considering introducing this option since April, after they revealed they had lost 200,000 subscribers during the first three months of the year.
However, a huge reason for the drop in paid users was Netflix’s decision to pull out of Russia, leading to a loss of 700,000 Russian users. Netflix also says that there are at least 100 million users that use accounts they don’t pay for—and their priority is to monetise that group of people.
“Today we are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner,” said Greg Peters, Netflix’s Chief Operating Officer and Chief Product Officer, “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.”
According to analysts, they were not surprised by Netflix’s choice in Microsoft. The choice in partner offers fewer conflicts of interest for Netflix than some other companies.
“Unlike the top three ad sellers in Google, Meta, and Amazon, Microsoft hasn’t pushed competing streaming products,” wrote analyst Ross Benes.
“It’s very early days and we have much to work through. But our long term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers,” continued Peters.
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