Microsoft will help Netflix in streaming with advertisement
Netflix has chosen Microsoft to assist with the distribution of advertisements for a new, more affordable tier of its video streaming service. The service is scheduled to debut later this year.
Since its beginnings 15 years ago, Netflix has staunchly refused to include adverts in its video streaming service. The collaboration announced on Wednesday marks a big step toward Netflix’s first entrance into advertising. Since the company lost 200,000 subscribers in the first quarter of the year due to increased competition and rising inflation that has put pressure on household budgets, Netflix’s management decided it was time to offer a cheaper alternative and announced three months ago that it would abandon its resistance to ads.
The streaming provider Netflix has warned that it expects to post even higher subscriber losses for the April-June period, heightening the urgency to launch a cheaper version of its service financed by adverts in an effort to stem the flow of customers leaving the service. Its stock price has dropped by 70 percent this year, wiping out approximately $190 billion in shareholder capital and leading to the dismissal of hundreds of workers.
The Los Gatos, California-based firm is set to unveil its most recent quarterly results on July 19, but it has yet to reveal the exact release date for its ad-supported option beyond saying it will debut before 2023. Notably absent from Netflix’s announcement of its cooperation with Microsoft was any mention of the ad-supported plan’s expected price.
Greg Peters, Netflix COO, wrote in a post that also praised Microsoft’s “strong privacy protections,” “It’s very early days and we have much to work through,”
Microsoft has been locked in a heated rivalry with Google, the undisputed king of digital advertising, for the better part of two decades. This ad contract with a video streaming service boasting more than 220 million users is a big victory for Microsoft.
To quote from the press release: “This transaction gives Microsoft something it has needed in its burgeoning ad business – quality streaming video inventory that has potential to scale.” “said Ross Benes, an analyst with Insider Intelligence.
Microsoft is “thrilled,” according to Mikhail Parakhin, president of online experiences “In a blog post, Netflix explained its decision and reaffirmed its dedication to customer privacy.
Though Microsoft’s software is still found on the vast majority of PCs across the world, Google has grown in stature thanks to its successful search engine, Android software for smartphones, and other digital services that brought in over $200 billion in advertising income for the company last year.
However, Google’s ad sales are dependent on the personal information that its mostly free services collect about its billions of global users, a form of surveillance that Netflix apparently wants to avoid with the commercial interruptions in its video service in order to reduce the risk of alienating subscribers. YouTube, which is owned by Google, is a video-sharing website that competes with Netflix for viewers and may eventually pose a threat to Netflix in the advertising market as well.
Microsoft might have also benefited from some other circumstance. Reed Hastings, co-founder and co-chief executive officer of Netflix Inc., was a member of the board of directors at Microsoft Corp. from 2007 until 2012.