Netflix Selects Microsoft as Partner for Upcoming Ad-Supported Tier

By Mollie Cahillane 


After weeks of speculation, Netflix tapped Microsoft as its partner for its upcoming ad-supported tier.

Netflix hopes to debut its AVOD offering as early as the end of this year and will use Microsoft’s technology to pull it off.

“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 COO Greg Peters said in a statement.

In April, the streaming service announced plans to unveil an AVOD tier after it faced its first subscriber loss in over a decade. The legacy streaming service had been staunchly against advertising since its launch, but earlier this year, co-CEO Reed Hastings admitted that it “makes a lot of sense” to offer a cheaper tier. Netflix currently has 221.6 million subscribers (plus an additional estimated 100 million households from password sharing).

Last month, Google and NBCUniversal were reportedly in the running to partner with Netflix. No word yet on if the partnership with Microsoft will be exclusive or if other tech giants are still in the mix. And unlike NBCUniversal (Peacock) and Google (YouTube), Microsoft doesn’t own a streaming service that competes with Netflix.

“At launch, consumers will have more options to access Netflix’s award-winning content. Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information,” said Mikhail Parakhin, Microsoft’s president of web experiences, in a statement.

“This is a big day for Netflix and Microsoft. We’re excited to offer new premium value to our ecosystem of marketers and partners while helping Netflix deliver more choice to their customers,” Parakhin added.

The announcement comes ahead of Netflix’s second-quarter earnings report on Tuesday, July 19. The streaming service previously warned it could drop as many as two million subscribers during the quarter.

“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. We’re excited to work with Microsoft as we bring this new service to life,” said Peters.