It’s been revealed that the Netflix streaming service intends to launch an ad-supported subscription plan – and they’ve now partnered with Microsoft to make it a reality. This was revealed in an announcement from both companies.
As noted by Netflix COO Greg Peters via CNBC:
“Microsoft has the proven ability to support all our needs as we together 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,” he stated.
The streaming service has attempted to avoid launching an ad-supported plan in the past. But, in their effort to both retain and acquire new subscribers, they’ve decided it would be best to offer a cheaper option for consumers. This ad-supported tier will thus represent that cheaper option.
Netflix subscribers are more than familiar with Netflix’s price increases. As the streaming platform aims to improve its original content with bigger budgets and spending power, it takes a toll on their subscription costs. This should allow subscribers a way to continue their Netflix subscriptions while allowing the streaming platform to maintain their budgets.
Apparently Netflix also eyed a variety of advertising partners to launch their ad-supported subscription plan. With names like Google and Comcast having been considered, it was Microsoft that ultimately came out on top. It turns out that they were an ideal partner as they don’t own a competing streaming service such as Google’s YouTube or Comcast’s ownership of Peacock via NBCUniversal.
With that said, the ad-supported tier is still in its “very early days,” with “much to work through” before its intended launch near the end of 2022. It’ll be interesting to see how this impacts Netflix as it will be quite the change after years of avoiding any kind of advertising content. In the meantime, it looks like Netflix could be losing 2 million subscribers during its second quarter. Furthermore, their shares have dropped more than 70% year-to-date. Indeed, the streaming landscape is going through all kinds of massive changes at the moment, so it will be exciting to see where Netflix manages to go from here.