Netflix names Microsoft as its “global advertising technology and sales partner” for its upcoming ad-supported streaming tier, rumored to arrive later in 2022
Morning War & Peaceniks!! Welcome to our BREAKING NEWS Q&A edition! Evann Gastaldo / Newser : Netflix Has More News on Ad-Supported Tier Rik Henderson / Pocket-lint : Netflix's ad-supported tier will be powered by Microsoft, but no word on launch date yet WRAL TechWire : Netflix partners with Microsoft for its first cheaper, ad-supported service RTÉ : Netflix names Microsoft as partner for ad-supported subscription plan Priya Singh / BGR India : Netflix teams up with Microsoft for its cheaper ad-supported subscription tier Agence France-Presse : Netflix Partners With Microsoft To Offer Cheaper Streaming Plan Arif Bacchus / OnMSFT.com : Microsoft is Netflix's new partner for an ad-supported subscription plan David Becker / Appleosophy : Netflix and Microsoft partner for upcoming ad-supported version Australian Financial Review : Netflix teams up with Microsoft for ad-supported streaming tier Duncan Riley / SiliconANGLE : Microsoft tapped to provide advertising on ad-supported Netflix tier Alap Naik Desai / Neowin : Microsoft will supply AdTech to Netflix for its new, cheaper subscription tier with ads Chris Dziadul / Broadband TV News : Netflix to partner with Microsoft José Adorno / 9to5Mac : Netflix teams up with Apple's old nemesis for upcoming ad-supported plan Tweets: Satya Nadella / @satyanadella : We're thrilled Netflix has selected Microsoft as its advertising technology and sales partner. We want publishers to have more long-term viable ad monetization platforms, so more people can access the content they love wherever they are. https://blogs.microsoft.com/ ... Alex Sherman / @sherman4949 : Unlike Google (YouTube) and Comcast (Peacock), who were other potential advertising partners, Microsoft doesn't own/operate a competing streaming service with Netflix. https://www.cnbc.com/... Andrew A. Rosen / @aagave : Given that it's 1. least-discussed outcome of $MSFT AND 2. Greg Peters (who oversees games, too) making the announcement 3. I think there's a lot more to this partnership. https://about.netflix.com/... Dare Obasanjo / @carnage4life : This is the streaming version of Microsoft being the provider of ads for Yahoo! Search. It makes total sense for Netflix to outsource this versus try to build from scratch especially as time is of the essence. Helps that Microsoft isn't a competitor. https://www.theverge.com/... @modestproposal1 : “More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side” “Microsoft said all ads served on Netflix will be available exclusively through Microsoft” https://www.wsj.com/... James Clayton / @jamesclayton5 : After years of stating that commercials would never be on Netflix, Netflix chooses Microsoft as its advertising partner. Cheaper ad version of Netflix supposedly coming later this year https://twitter.com/... @xandr : Exciting news from @Microsoft and @Netflix today! We're thrilled to be part of this exclusive partnership powering Netflix's first ad-supported subscription plan. https://blogs.microsoft.com/ ... Josh Fruhlinger / @jfruh : season 5 of STRANGER THINGS: it's the mid '00s, the kids are all grown up, and we realize we're in the alternate timeline where zunes won https://twitter.com/... Kelsey Sutton / @kelseymsutton : Microsoft wins the Netflix ad biz! https://twitter.com/... Dave Lee / @daveleeft : How well will the ROI on Microsoft + Netflix ads compare to what Amazon can do with its data + Prime Video? https://twitter.com/... Vikas SN / @tsuvik : Netflix has selected Microsoft as its global advertising technology and sales partner “Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members” it says https://about.netflix.com/... Ari Paparo / @aripap : Huge underdog win for MSFT (and @xandr!). I'm going to bet that experience with global sales was a big plus as they represent MSN inventory throughout Europe and other geos. https://twitter.com/... Alex Zalben / @azalben : “Hi, I'm Clippy! It looks like you're trying to watch Warrior Nun?” https://about.netflix.com/... Frank X. Shaw / @fxshaw : Great to partner with Netflix and help power their first ad-supported subscription offering for consumers! https://about.netflix.com/... Todd Spangler / @xpangler : Netflix announces that it's partnered with Microsoft on new ad-supported subscription plan https://about.netflix.com/... See also Mediagazer
Context & Ripple Effects
Netflix had already signaled it was evaluating a cheaper ad-supported offering; naming Microsoft turns that exploration into an operating partnership. Microsoft's recently acquired Xandr ad-tech business was identified in related coverage as the deal's linchpin, tying Netflix's new revenue stream to Microsoft's advertising ambitions.
The partnership was not permanent infrastructure: Netflix later reworked the commercial terms with Microsoft and ultimately said it would build its own ad platform rather than continue using Microsoft for the technology.
First-order effects
- Netflix gains a global technology and sales partner for its planned ad tier, while Microsoft becomes the company responsible for supplying advertising infrastructure and sales support.
- Microsoft's Xandr operation gets a prominent streaming customer, making the acquisition central to Microsoft's effort to expand its online advertising business.
Second-order effects
- Netflix's ability to sell a lower-priced tier becomes tied initially to Microsoft's ad-sales execution and technology, giving the partners a shared incentive to refine the revenue arrangement—a point reflected in the later deal rework.
- Competing streaming services face a Netflix offer that combines subscription video with an established ad-tech and sales organization, raising the importance of ad inventory, targeting, and advertiser relationships.
Third-order effects
- Netflix's later move toward an in-house platform indicates that major streaming services may treat ad technology as a strategic control point rather than a permanently outsourced utility.
- The broader market is moving toward streaming bundles that monetize both subscriptions and advertising, with platform ownership determining who controls the advertiser relationship and related data.
The trend: Streaming services are adding advertising tiers while progressively seeking greater control over the technology and sales stack behind them.