On Wednesday, Netflix revealed a partnership with Microsoft and the use of their technology to help serve the ads in their less expensive, ad-supported version of their video streaming service.
Later this year, according to Netflix, this ad-supported tier will go live. Additionally, they have vowed to lessen the frequent privacy invasions that come with digital marketing.
After adamantly refusing to include advertisements in its video streaming service since its beginnings 15 years ago, the agreement that was announced on Wednesday represents a significant step toward Netflix’s first venture into advertising.
After revealing it had lost 200,000 subscribers in the first three months of the year due to fiercer competition and rising inflation that put pressure on household budgets, management decided the time had come for a less expensive option. Three months later, Netflix announced it would give up its resistance to ads.
Netflix may have once been one of the major participants in the OTT market, but today, there are an increasing number of OTT platforms all over the world. These competitors have been successful in reducing Netflix’s subscriber base. Additionally, there are a number of privately owned, competitively priced companies in this market in a number of different nations.
Additionally, the majority of Netflix’s most recent original programming produced for India hasn’t been warmly appreciated. The Indian Diaspora was primarily taken into consideration when creating the successful shows, such Indian Matchmaking. In the majority of South Asian nations, Netflix is dealing with a similar scenario. In actuality, exceptions include South Korean programmes like Squid Game. South Korea did not pay nearly half the attention the rest of the world devoted to it.
The need to provide a less expensive version of its service supported by advertisements to help reverse consumer attrition increased when Netflix issued a warning that it will likely post considerably higher subscriber losses for the April–June quarter. This slump saw its stock price fall by 70% so far this year, wiping off approximately $190 billion in shareholder capital and resulting in hundreds of layoffs.
The Los Gatos, California-based company has not yet indicated when its ad-supported option would be accessible, other than to say that it will launch before 2023. The company is set to report its April-June results on July 19.
Netflix hasn’t specified the pricing at which its ad-based tier will debut. Most likely, it will cost about $5.99 per month, the same as American streaming service Hulu. Of course, it will cost less in several Asian markets.