In an effort to entice customers, Netflix will team up with Microsoft to introduce a less expensive subscription package that includes commercials, the companies announced on Wednesday.
After a dismal first quarter in which it lost members for the first time in a decade and years of opposition to the whole idea of showing commercials, Netflix decided to build the less expensive service.
The additional, ad-supported membership will be in addition to the three presently offered choices, the least expensive of which costs $10 a month in the US.
Microsoft will be in charge of creating and overseeing the platform used by marketers to deliver advertisements to Netflix subscribers.
‘It’s very early days and we have much to work through,’ Greg Peters, Netflix’s chief operating officer, said in a statement.
Microsoft added that advertisers ‘will have access to the Netflix audience and premium connected TV inventory.’
With the addition of advertising, Netflix will be subject to certain contentious issues, such as discussions about the vast collection of customer personal data for the purpose of targeting them with more lucrative, individualised offers.
Because Microsoft presents less conflicts of interest for Netflix than some other corporations, analysts were not surprised by Netflix’s choice.
Microsoft hasn’t promoted competing streaming programmes, contrary to the top three ad suppliers Google, Meta, and Amazon, according to analyst Ross Benes.
Following years of subscriber growth, Netflix lost 200,000 customers globally in the first quarter compared to the end of 2021, which caused its share price to plummet.
The streaming giant reacted by announcing the arrival of advertising on the service, with the aim to finance the investments necessary to maintain its position as leader in the industry that it launched.
Netflix indicated it would get tougher on sharing logins and passwords, which allow many people not to pay to access the platform’s content.
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