Image Source: Adweek
In order to give users a more affordable membership plan with advertisements, Netflix has partnered with Microsoft.
According to the streaming juggernaut, the service will be an “addition” to its current plans, which do not contain advertisements. However, the cost of the new service that the business would charge users has not yet been made public.
Following the publication of its first subscriber decline in more than ten years and the layoff of hundreds of employees early this year, Netflix announced the change. In contrast to the 2.5 million analysts had predicted the company would add in that time, it lost 200,000 users between January and March. Between April and June, Netflix also anticipates losing an additional two million subscribers.
The business announced that to launch a “lower priced ad-supported subscription plan,” it has chosen Microsoft as its global advertising technology and sales partner.
Advertisements were never a priority for Netflix. Monthly subscriptions were the foundation of the entire business strategy. However, Netflix’s management had to break its regulations. It happened after horrendous statistics revealed that the company was losing subscribers. Additionally, households are looking to end their Netflix membership as a potential saving mechanism due to the cost of living crisis as they restrict their budgets. Fear has gripped investors.
Amazon Prime, HBO Max, Apple TV, and Disney+ are just a few of the fierce competitors for Netflix. Unfortunately, there are not enough paying subscribers to cover everyone, despite the abundance of possibilities. Netflix is developing a less expensive version that will include advertisements and will launch later this year. Like Pandora, Spotify offers free music if you’re willing to watch ads.
Accepting ads is hoped that Netflix will draw in new customers. However, the move also demonstrates that advertisements, considered so dated by high-end streaming firms just a few years ago, are still very much in use today.
According to a Tuesday Wall Street Journal story, Netflix is attempting to renegotiate its contracts with big entertainment companies so that it can include advertisements in its service.
The company is having in conversations with Sony Pictures Television, Universal, and Warner Bros.
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Warner Bros. opted against commenting. A BBC request for comment received no immediate response from Universal or Sony.
After the business revealed the unexpected decline in subscribers, the first since October 2011, Netflix’s market value was reduced by $50 billion in April.
The business, which had racked up millions of subscribers during Covid lockdowns, reported losing 700,000 because it had to shut down its service in Russia. Additionally, it cited users’ sharing of Netflix credentials and competition from rivals as causes.
As it struggled with the decline in consumer numbers, the company announced 300 job losses last month. Additionally, Ted Sarandos, the co-CEO of Netflix, revealed last month that the company was in discussions with several businesses to figure out how to appeal to price-conscious customers.