Netflix has picked Microsoft as its partner for its ad-supported service, according to a company’s announcement Wednesday.
“Microsoft has the proven ability to support all our needs as we together 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,” Netflix COO Greg Peters said in a statement.
The popular streamer — which has been going through mayhem as it tried to retain and add subscribers — announced in April that it plans on rolling out an ad-supported tier after years of resisting the move.
Co-CEO Reed Hastings has been the number one enemy of adding commercials or other promotions to the platform but said during the company’s prerecorded earnings conference call that it “makes a lot of sense” to offer customers a cheaper option.
The offering has a lot of profit potential for Netflix as it works to sign up more users. In an effort to lure more subscribers, Netflix has increased its content spend, particularly on originals. To pay for it, the company raised prices of its service. Netflix said those price changes are helping to bolster revenue but were partially responsible for a loss of 600,000 subscribers in the U.S. and Canada during the most recent quarter.
Netflix has been in negotiation with lately, including Google and Comcast, as it prepares to launch the tier before the end of 2022.
Unlike Google, which owns YouTube, and Comcast, which owns NBCUniversal’s Peacock, Microsoft doesn’t operate a competing streaming service to Netflix.
Peters said the ad efforts are still in the “very early days,” with “much to work through.”