Microsoft announced today that they had been selected as the new partner to help bring an ad-supported subscription plan to Netflix.
Beating Google and NBC. Last month we reported that NBCUniversal and Google had been the frontrunners, so the announcement is quite a surprise that Microsoft had been chosen. “Unlike the top three ad sellers in Google, Meta, and Amazon, Microsoft hasn’t pushed competing streaming products.” Insider Intelligence Principal Analyst Ross Benes said.
What this means. Despite growing revenues, Netflix’s share of overall OTT subscription revenues is shrinking. It had 49.1% of total US OTT subscription revenues in 2018, which is expected to fall to 29.3% by the end of this year. “This deal gives Microsoft something its growing ad business has lacked–quality streaming video inventory that has potential to scale. Microsoft, the fourth largest ad seller in the US, offers fewer conflicts of interest for Netflix than some other companies and it has strong relationships with a wide swath of advertisers.” Benes says.
What Netflix is saying.
In April we announced that we will introduce a new lower priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard, and premium plans. Today we are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner.
Microsoft has the proven ability to support all our advertising 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.
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.
The official announcement. There isn’t much information on the partnership yet, or when the new ad-supported options will start, but you can read the official announcement from Microsoft here. We have reached out to Microsoft for a quote.
Why we care. Advertisers should benefit from additional ad placement options, especially on such a large platform such as Netflix. And those who have been sleeping on Microsoft or CTV advertising in general should jump on the opportunity ASAP.