It’s two giants’ alliance. Microsoft announced on Wednesday, July 13, that it would manage the technology to sell ad space on Netflix, a news item for the streaming platform that has decided to offer cheaper subscriptions but with commercials.
Netflix announced the move in April, after a disappointing first quarter in which it lost subscribers for the first time in a decade, and after years of opposition to the very idea of running ads. The launch date for this service has still not been announced.
“It seems clear to Hulu”had noted the head of Netflix, Reed Hastings, referring to a competing service, during a conference call with analysts. “If you want the ad-free option, it will always be possible. If you prefer to pay less and tolerate ads, there will also be an offer for you.”, he added. This subscription will be added to the three options already available (“Essential”, “Standard” and “Premium”), the cheapest being ten dollars a month in the US.
Microsoft will be responsible for designing and managing the platform for advertisers who wish to display ads to Netflix users. “Microsoft has proven its ability to meet all of our advertising needs by building a new ad subscription offering with us”said Greg Peters, Netflix’s chief operating officer, quoted in Wednesday’s statement.
According to the US special press, Netflix had considered other partners, such as Google, the world leader in advertising, and Comcast, an ISP that owns Peacock, the platform for NBCUniversal.
Microsoft has the advantage of not having competing streaming services, unlike Google, Meta and Amazon, the three companies that download about two-thirds of digital advertising budgets in the United States. Microsoft “placed in fourth place” in this market in the United States, notes analyst Ross Benes of eMarketer for Agence France-Presse (AFP). “He represents fewer conflicts of interest for Netflix than other companies and has established relationships with a wide range of advertisers.”
“This contract gives it something that its advertising business has lacked – quality inventory in video streaming with strong growth potential”he adds.
Netflix, for its part, believes that Microsoft will “to allow innovation in a flexible way, both in terms of technology and sales techniques”and him “provides strong protection of the subscriber’s privacy”, said Greg Peters. Introducing ads means exposing yourself to the issues that have been debated for years about consumers’ personal data, collected on a large scale to target them with personal, more lucrative ads.
“We are at the very beginning, but our long-term goal is clear: more choice for consumers and a premium tool for brands, better than in linear TV”detailed the director.
A leading position to maintain
Ross Benes expressed his doubts at this point, judging “curious” that Netflix did not prefer to design and manage its own advertising platform. “One of their biggest strengths is their user experience”he points out. “Given the ad formats available on Microsoft products, such as Bing and LinkedIn, this partnership indicates that ads on Netflix will not set a new standard in the burgeoning streaming industry, but will instead mimic the usual formats, for the best. or the worst. “
After years of capturing high-speed users, Netflix lost 200,000 subscribers globally in the first quarter compared to the end of 2021, news that at the time its stock had plunged 25%. The California group responded by announcing the arrival of advertisements on the service, which should help it fund the necessary investments to maintain its leading position in the industry it has launched. He had also specified that he would tighten the screw on the side of sharing identifiers and passwords, which allows many people not to pay to access the contents of the platform.