Netflix Found Its Ads (with Major Consequences)

Netflix is ​​forced to launch a new subscription with advertising later this year. For this, the streaming service will collaborate with a striking partner: Microsoft.

Watch movies and series where and when you want, without annoying advertising: after the introduction in 2013, Netflix also offered Dutch users a no brainer of an experience.

Netflix is ​​having a hard time

In 2022 a lot has changed. Other entertainment giants have finally gotten the memo, too, each launching their own streaming service over the past few years. Disney+, HBO Max, Apple TV+ and so on.

This fragmentation has two major consequences. Consequences that we as users also notice. For example, Netflix has long ceased to be a gathering place where you can watch practically every major blockbuster. The streaming service has to rely mainly on its own Originals because of all its competitors.

Suddenly, when it comes to content, Netflix is ​​the weaker party. Unlike Disney and HBO, the company doesn’t last for decades legacycontent or mega franchises such as Star Wars and Harry Potter.

Ads are coming!

The company feels that. Earlier this year, founder Reed Hastings had to report disappointing growth figures. Then $50 billion in stock market value evaporated and several mass layoffs followed. Plans were scrapped and shareholders called for drastic measures.

And we’re going to get that too. Where Netflix started as a place to avoid the ubiquitous television commercials, the streaming service is now diving on top of advertisements. An emergency remedy that Hastings has repeatedly spoken out negatively about in the past and which the company also did not want to believe in.

Until now. Netflix has to, you can almost say, at least if you have to believe shareholders. Last month, co-CEO Ted Sarandos already confirmed that ads are coming to the streaming service.

“We’ve been ignoring a big customer segment, people who say, ‘Hey, Netflix is ​​too expensive for me and I don’t mind advertising,’” he explained.

Do not panic

Sarandos also immediately provided an important piece of nuance. No, current subscribers will not suddenly be bothered by advertising between their favorite series and films.

“We’re adding an ad layer; we don’t add ads to Netflix as you know it now. We’re adding an ad tier for people who say, ‘Hey, I want a lower price and I’ll watch ads,’” said the co-CEO.

Now, a month later, it is clear how the American company wants to enter the highly competitive advertising market.

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Microsoft strikes

To do this, Netflix hires a small and obscure company called Microsoft. You may know them.

The streaming service has officially announced Microsoft’s global ‘advertising technology and sales partner’ will be.

“It’s still very early and we have a lot to tackle,” said Netflix COO Greg Peters. “But our long-term goal is clear. More choice for consumers and a premium, better than linear TV brand experience for advertisers. We are excited to partner with Microsoft to bring this new service to life.”

It is not yet officially known when the new Netflix subscription with ads will be launched. However, if we are to believe the rumors, you can already opt for a cheaper subscription before the end of 2022. Provided you don’t mind if Stranger Things accompanied by some advertisements.

In any case, both shareholders and the companies expect a lot from it. A subscription to the streaming service currently costs almost twice as much as a subscription to, for example, Disney + or HBO Max. A cheaper subscription with advertising opens up a completely new segment. At least, that’s what one hopes.

Secret Weapons and the Future

Netflix also has a number of secret weapons in its toolbox. For example, the streaming service is exploring the lucrative world of live streaming and is considering tackling password sharing. A potential source of many millions of new subscribers.

The choice for Microsoft is striking. Astute readers take note on social media that Netflix runs on AWS, Amazon’s cloud technology, a direct competitor to Microsoft’s Azure.

Furthermore, Netflix wants to dive into streaming games, something that Microsoft has also taken significant steps in recent years with its Xbox division. Is fixing advertisements only the first step in a further close collaboration? Or can we, as some analysts expect, even count on a complete acquisition by Microsoft?

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Let’s first wait for the new subscription, and the subsequent quarterly figures. Other streaming services are undoubtedly watching with great interest.

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Netflix Found Its Ads (And It Has Major Consequences)