Microsoft will manage ads on Netflix

It is the alliance of two giants. Microsoft announced on Wednesday July 13 that it would manage the technology of selling advertising space on Netflix, a novelty for the streaming platform which has decided to offer cheaper subscriptions, but with advertising.

Netflix announced the move in April, after a disappointing first quarter in which it lost subscribers for the first time in a decade, and after years of resisting the very idea of ​​running ads. The launch date of this service has still not been announced.

“Clearly it works for Hulu”had noticed the boss of Netflix, Reed Hastings, in reference to a competing service, during a conference call with analysts. “If you want the ad-free option, that will always be possible. If you prefer to pay less and tolerate ads, there will be an offer for you too », he added. This subscription will be added to the three options already available (“Essential”, “Standard” and “Premium”), the cheapest being ten dollars per month in the United States.

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Microsoft will be responsible for designing and managing the platform for advertisers wishing to serve ads to Netflix users. “Microsoft has the proven ability to meet all of our advertising needs by building a new ad subscription offer with us”said Greg Peters, Netflix’s chief operating officer, quoted in Wednesday’s statement.

Data Privacy

According to the American specialized press, Netflix had considered other partners, such as Google, the world leader in advertising, and Comcast, an Internet provider which owns Peacock, the platform of NBCUniversal.

Microsoft has the advantage of not having competing streaming services, unlike Google, Meta and Amazon, the three companies that rake in around two-thirds of digital ad budgets in the United States. Microsoft “placed in fourth position” in this market in the United States, notes analyst Ross Benes of eMarketer for Agence France-Presse (AFP). “He represents fewer conflicts of interest for Netflix than other companies and has established relationships with a wide range of advertisers. »

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“This contract gives it something that its advertising business has been missing – quality inventory in video streaming, with strong growth potential”he adds.

Netflix, for its part, believes that Microsoft will “to allow innovation in a flexible way, both in terms of technology and sales techniques”and him “provides strong protections for subscriber privacy”, said Greg Peters. Introducing advertising means exposing yourself to the questions that have been debated for years around the personal data of consumers, collected on a large scale to target them with personalized, more lucrative ads.

“We are at the very beginning, but our long-term objective is clear: more choice for consumers and a premium tool for brands, better than in linear television”detailed the director.

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A leading position to maintain

Ross Benes expressed his doubts on this point, judging ” curious “ that Netflix preferred not to design and manage its advertising platform itself. “One of their greatest strengths is their user experience”he points out. “Given the ad formats found on Microsoft products, such as Bing and LinkedIn, this partnership indicates that ads on Netflix will not set a new standard in the burgeoning streaming industry, but will instead mimic the usual formats, For the best or for the worst. »

After years of conquering users at high speed, Netflix lost 200,000 subscribers globally in the first quarter compared to the end of 2021, news that had its stock plummeting 25% at the time. The Californian group reacted by announcing the arrival of advertising on the service, which should help it finance the investments necessary to maintain its leading position in the industry that it has launched. He had also specified that he was going to tighten the screw on the side of the sharing of identifiers and passwords, which allow many people not to pay to access the content of the platform.

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The World with AFP

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