Netflix chooses Microsoft to manage advertising on its platform

Microsoft announced Wednesday that it will manage ad sales technology in Netflixthe streaming giant that wants to offer cheaper subscriptions but with advertising. Netflix announced the decision in April, after a disappointing first quarter, where it lost subscribers for the first time in a decade, and after years of resisting the very idea of ​​running ads.

“It is clear that it works for Hulu”, had warned the head of Netflix Reed Hastings, referring to a competing service, during a conference call with analysts.

This subscription will be added to the three options already available (“Essential”, “Standard” and “Premium”), the cheapest being ten dollars a month in the United States. Microsoft will be responsible for designing and managing the platform for advertisers who want to show ads to users of Netflix.

According to the American specialized press, Netflix it had considered other partners, such as Google, the world leader in advertising, and Comcast, an Internet provider that owns Peacock, the NBCUniversal platform.

Microsoft has the advantage of not having any competing streaming services, unlike the three companies that get around two-thirds of digital advertising budgets in the US, Google, Meta and Amazon.

The Redmond group “is placed in fourth position” in this US market, highlights analyst Ross Benes of eMarketer for AFP. “It represents fewer conflicts of interest for Netflix than other companies and has established relationships with a wide range of advertisers.

Netflix he believes Microsoft will “allow you to innovate flexibly, both on the technology side and in sales techniques,” and “will give you strong protections for subscriber privacy,” said Greg Peters.

Introducing advertising means exposing yourself to the issues that have been debated for years around consumers’ personal data, collected on a massive scale to target them with more lucrative, personalized ads.

“We are very early, but our long-term goal is clear: more options for consumers and a premium tool for brands, better than linear television”, detailed the director.

Ross Benes expressed his doubts on this point, judging it “curious” that Netflix he preferred not to design and manage his own advertising platform.

After years of conquering high-speed users, Netflix it lost 200,000 subscribers worldwide in the first quarter compared to the end of 2021, news that had caused its stock to fall 25% at that time.

The Californian group reacted by announcing the arrival of advertising on the service, which should help it finance the necessary investments to maintain its leadership position in the industry it has launched. He had also indicated that he was going to tighten the nut on the side of the exchange of identifiers and passwords, which allow many people not to pay to access the content of the platform.