Netflix’s strategy to launch a cheaper subscription plan with ads gained a new chapter yesterday (13). The company announced an agreement with Microsoft, which will be the global sales and advertising technology partner of the streaming platform.
“It’s too early and we have a lot to work on. But our long-term goal is clear. More choice for consumers and a better-than-linear TV brand experience for advertisers,” said Netflix’s chief product officer. , Greg Peters, in a statement.
Here are six facts about the change and why Netflix is taking this new path.
1. Why Ads?
Netflix had already announced in April this year that it would launch a cheaper plan.
For this to be possible, the company’s strategic decision was to create a type of subscription with the possibility of advertisements being displayed while using the streaming platform.
2. How will the ad appear?
Netflix’s past and current press release do not reveal details about how these ads will appear to consumers. Apparently, this is still being developed.
What is known is that only one of the plans will have publicity. Current packages — Basic, Standard and Premium — remain ad-free.
3. When will the cheapest plan be released?
There is still nothing confirmed. But a May report in the New York Times points out that this should happen later this year.
4. What is Microsoft’s role?
Microsoft will act as a sales partner for the advertisements that will be served. “Microsoft has the proven ability to support all of our advertising needs as we work together to create a new ad-supported offering,” Netflix said in its statement.
All ads running on Netflix will be available on the Microsoft platform. “Today’s announcement also endorses Microsoft’s approach to privacy, which is based on protecting customer information,” said Mikhail parakhinpresident of the company’s web experiences.
Satya Nadella, the company’s chief executive, publicly celebrated the news. “We are delighted that Netflix has selected Microsoft as its advertising technology and sales partner,” he said on his Twitter account.
5. Change to recover money and subscribers
Netflix’s announcement comes less than a month after the company laid off 300 employees to settle accounts after a considerable loss of subscribers.
According to an earnings report released in April by Netflix, the company lost 200,000 subscribers during the first quarter of 2022. In the same period, it had net income of $1,597 billion, down from the $1,706 billion achieved in the first three. months of 2021. It was the first drop in subscribers in a decade
The majority of those laid off, 216, are from the US and Canadian offices. Of the total, 53 are from Europe, 30 from Asia and 17 from Latin America.
In May, the streaming platform had already laid off 150 professionals after its shares sank, as investors realized that growth had stalled.
“We regret not having seen our downturn sooner, we could have ensured a more gradual readjustment of the business,” Netflix founders Reed Hastings and Ted Sarandos wrote in a text sent to company employees, according to The Hollywood Reporter.
6. Billing for those who share passwords
Another announcement that shows that Netflix has been moving against the drop in subscribers came in March of this year, when the company said it would start applying extra fees for those who share an account subscription and don’t live in the same house.
In the tests — started in Chile, Costa Rica and Peru — Netflix allows users of the standard and premium plans to pay this extra fee to add up to two external access accounts.
The values will vary depending on the country, with fees ranging from US$ 2.12 (R$ 11.59 for direct conversion) and US$ 3 (R$ 16.40). In Brazil, there is still no forecast of if and when this will happen.
*Collaborated by Bruna Souza Cruz, from Tilt in São Paulo