Netflix has tapped Microsoft to help power an ad-supported version of its global subscription streaming service, the companies announced on Tuesday.
In a blog post, Netflix said companies will be able to use Microsoft’s advertising platform and tools to reach its streaming subscribers when the ad-supported version of Netflix launches.
“This is a big day for Netflix and Microsoft,” a Microsoft spokesperson said in a statement on Tuesday. “We’re excited to offer new premium value to our ecosystem of marketers and partners while helping Netflix deliver more choice to their customers.”
Greg Peters, the chief operating officer of Netflix, said Microsoft “has the proven ability to support all our advertising needs as we together build a new ad-supported offering.”
“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,” Peters said. “We’re excited to work with Microsoft as we bring this new service to life.”
Netflix has been under pressure to draw more subscribers to its streaming service after it reported a net decline of 200,000 paying customers in its most-recent quarterly earnings report.
The decline was blamed in part on password sharing between paying and non-paying customers, particularly in Latin America, where the streaming service has recently implemented a crackdown on freeloaders.
Some analysts say Netflix’s decision to spend billions of dollars on content coupled with its high fees — a high-definition version of its service costs $15.50 a month, while a premium tier with access to ultra-high definition (UHD/4K) video costs $20 a month — have driven customers to other services like Hulu, Amazon Prime Video, Disney Plus and HBO Max, all of which are cheaper.
Netflix is hoping a cheaper version of its streaming service subsidized by advertisements will help it attract frugal customers while opening up an additional source of revenue.