Netflix selects Microsoft as an ad-supported service partner

The US streaming media giant Netflix announced that it has selected Microsoft Corporation as the technology and sales partner of the low-cost subscription service with advertising. Affected by the news, Netflix shares rose 2% on the day to close at $178.06 per share.


In April, Netflix said it would launch an ad-inserted, cheaper membership service to attract more users to sign up after an unprecedented drop in Netflix membership. This comes after Netflix saw its first membership decline in more than a decade and forecast a possible net loss in the coming quarters.


Netflix COO Greg Peters (Greg Peters) said in an official blog post that the reason for choosing Microsoft as a technology and sales partner for the low-cost subscription service is to value Microsoft's technological innovation capabilities and the company's commitment to consumers. Protection of personal privacy.


Peters said that it is only the early stage of cooperation between the two companies, and the two companies still have a lot of work to do, but the long-term cooperation goal of the two parties is very clear, that is, to provide consumers with more online video membership options while providing advertisers with Better brand marketing services than traditional TV channels.


Under the partnership, Microsoft is expected to be responsible for sales of Netflix video ads in the future.


Although Microsoft's main business is software development, the company has already made some achievements in the field of online advertising. Last year's total online advertising revenue reached 10 billion US dollars, the company mainly sells advertising space on its various Internet services, such as the Bing search engine, the white-collar social network LinkedIn and so on.

Just last month, Microsoft completed the acquisition of "Xandr", an online advertising platform owned by US telecom operator AT&T. The platform allows advertisers to buy ad space from thousands of websites to target ad audiences.


It is worth mentioning that Microsoft and Netflix have had intersections in the past, and Microsoft President Brad Smith (Brad Smith) has been a director of Netflix since 2005.


Next Tuesday, Netflix will report its second-quarter financial results, and the company deliberately chose to announce the partnership ahead of the earnings report.


For the second quarter, Netflix reminded investors that although a new season of the classic homemade thriller "Stranger Things" was broadcast in this quarter, breaking the on-demand record, various factors may still lead to the loss of 2 million video members.


According to reports, Netflix's move is not an isolated case. The US online video industry has set off a wave of low-cost membership models with ads. For example, Disney's Hulu, NBC Universal's Peacock Video, and Warner Bros. Discovery's HBO Max have launched corresponding services.


In its streaming service Disney+, Disney also plans to launch a low-cost subscription service with ads.


Comscore, a U.S. technology market research firm, said that rising inflation in the United States has caused consumers to shrink their wallets and become more sensitive to product prices. In the streaming media industry, the penetration of low-cost subscription services with ads has exceeded that of ad-free members.


James Muldrow, an analyst at Comscore, said the time is ripe for a low-cost ad-supported membership, represented by Netflix, which has traditionally been ad-free for video services, which could allow video sites to Re-stimulate video membership growth.

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