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Netflix teams up with Microsoft to start showing adverts

With reports that Netflix experienced its first subscriber loss in more than a decade, and cuts of hundreds of jobs earlier in 2022, it plans to show subscribers advertisements, something they have refused to consider up until now.

The advertisements would be part of a cheaper subscription plan, similar to brands such as Spotify where you will need to listen to an occasional advert in between for free streaming of music. With the ever-rising costs of living, this option may be a welcome choice for millions of subscribers, who are already invested in watching Netflix’s many long-running series, including Stranger Things, Queer Eye and You. Fortunately for those who hate watching advertisements in between programming, it is likely that the subscription options without adverts will still remain.

Behind the scenes, Netflix has been working with several companies such as Microsoft, Google and Comcast’s NBCUniversal subsidiary to choose a partner to run the ads, but eventually chose Microsoft as their advertising partner. In a recent post from Netflix, Greg Peters, the Chief Commercial Officer at Netflix, states:

“Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering. More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members.”

For those not in the digital space, Microsoft may be seen as an unusual company for advertising, more commonly associated with computer software development. Microsoft Ads however is a long-running service providing pay-per-click advertisements for Bing, Yahoo and Duck Duck Go. Companies bid on how much they want to spend on their adverts and based on a number of other factors including relevancy, website quality and competitor bidding, this will ultimately determine how prominently your ad is placed.

How the advertisements will work with Netflix is still unclear, and according to Netflix “It’s very early days and we have much to work through.”, however, it could be predicted that we’ll see much more tailored advertisements for Netflix in comparison to what we usually see on traditional television advertising. Adverts will much more likely be based on a user’s browser history, demographics, and potentially from their Netflix viewing history too. We expect similar advertising as seen on programs such as YouTube, where short video clips are played before and halfway through episodes and films.

What are your thoughts on a cheaper subscription service with advertising? Would you be happy to pay less to view ads? Let us know in the comments!



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