In some highly anticipated streaming advertising news, Netflix says Microsoft will be its global advertising-technology and sales partner for its forthcoming low-priced, ad-supported streaming option.
The announcement was made via a blog post on Wednesday from Greg Peters, Netflix chief operating officer/chief product officer. The news comes as the streaming and CTV business is maturing and subscriber growth for Netflix and others has slowed down.
“Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering,” says Peters, adding: “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.”
Early reports said Netflix was in talks with possible advertising partners including Roku, Google, and Comcast Corp. about a possible deal in supporting the new ad-supported option.
A recent report from The Wall Street Journal says Netflix is re-negotiating some TV and movie programming deals with Hollywood studios to provide content for the new ad-supported service.
Peters adds: “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.”
One recent estimate from MoffettNathanson Research projected that Netflix could earn $1.5 billion in ad revenue by 2024. Earlier, media agency Havas projected Netflix could hit between $2 billion and $3 billion in yearly advertising revenues.
Netflix has said it would be looking into offering a low-cost advertising option to consumers, possibly by the end of 2022.
This reverses the company's long-time approach that it would never offer an advertising-supported streaming option.
In June, Microsoft closed a deal to buy advanced advertising sales and demand-side platform Xandr from AT&T. Xandr had worked with former AT&T media unit WarnerMedia TV networks and platforms.