[Asia Economy Reporter Jeong Hyunjin] Global online video streaming service (OTT) company Netflix has partnered with Microsoft (MS) to introduce an ad-supported subscription plan.
According to the Wall Street Journal (WSJ) and others on the 13th (local time), Netflix has decided to source MS's technology to place video ads within its content. Accordingly, all video ads on Netflix will be served exclusively through MS's platform.
Greg Peters, Netflix Chief Operating Officer (COO), said, "MS has the capability to support all of our advertising needs." He emphasized, "More importantly, they provide flexibility to innovate both technologically and in sales, while ensuring the privacy protection of our customers."
Before deciding on the partnership with MS, Netflix also considered Comcast and Google, but ultimately chose MS as the final partner, weighing the fact that MS would not enter the streaming competition. Comcast's NBCUniversal offers the Peacock streaming service, and Google owns YouTube, which appeared to influence the decision. Additionally, MS completed the acquisition of Xandr, AT&T's digital advertising platform subsidiary, last month. Netflix is focusing on the digital advertising primarily handled by this platform, which reportedly played a key role in finalizing the deal.
WSJ reported, citing sources, that Satya Nadella, MS CEO, and Reed Hastings, Netflix CEO, met last week at the Sun Valley Conference in Idaho?a social gathering of global business magnates?and finalized this matter.
In its Q1 earnings report announced in April, Netflix revealed that its global paid subscriber count decreased by about 200,000 for the first time in 11 years and stated it was considering introducing a low-cost subscription model with ads in exchange for a lower monthly fee. Since then, Netflix has been accelerating preparations to introduce the ad-supported plan. It is reportedly revising contracts with major Hollywood studios such as Warner Bros. to insert ads into popular content and is also searching for executives to oversee this effort.
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