It looks like things are coming together for Netflix’s lower-priced ad-supported tier, reported to arrive later this year: Netflix just revealed today that it's partnering with Microsoft as its "global advertising technology and sales partner" to help the streaming service earn revenue through ads.
Netflix COO Greg Peters said in a statement, “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.”
“This is a big day for Netflix and Microsoft,” wrote Mikhail Parakhin, president of Web Experiences, Microsoft, in an official blog. “We’re excited to offer new premium value to our ecosystem of marketers and partners while helping Netflix deliver more choice to their customers.”
Marketers that use Microsoft for advertising will have access to Netflix’s audience of 221.6 million subscribers. The tech company generated $10 billion in advertising sales last year and is known for its approach to privacy and protecting its customers’ information.
“Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members,” Peters added.
Since privacy was something the company wanted to prioritize for its ad-supported tier, picking Microsoft seemed like the best option for the streamer. In Netflix's earnings call, co-CEO Reed Hastings said, "The online market has advanced, and now, you don't have to incorporate all the information about people that you used to."
Another reason why Netflix probably went with Microsoft is because the tech giant also has a significant presence in the CTV space now, thanks to the recent acquisition of digital video advertising service Xandr. The deal with Microsoft allows the streamer to enter the ad space quickly.
The announcement comes a day after Disney disclosed its adtech deal with The Trade Desk.
The launch of Disney+’s ad-supported tier is coming soon, and Disney’s announcement yesterday could mean that advertisers will be able to target a family-friendly audience. Disney+ gained 7.9 million subscribers during its second fiscal quarter.