Netflix chooses Microsoft as Ad-Serving Partner

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On Wednesday, Microsoft announced that it has been selected as the partner to Netflix to provide their upcoming ad-serving needs. The premise is that Netflix is going to provide an ad-supported subscription offering that’s a lower price point than their current rates.

Netflix has been under an increasing amount of pressure as more streaming services enter the market. Their market share is down to roughly 45% from 55% from this same time last year, according to TechCrunch. It didn’t help when Netflix pulled out of Russia and lost 700,000 subscribers. The competitive landscape is continuing to chip away at the behemoth. In terms of services, there are Netflix, Amazon Prime Video, Hulu, YouTube TV, Disney+, Apple TV+, ESPN+, Discovery+, HBO Max, and I’m sure there are more, but those are the ones that I can quickly think of off the top of my head.

Netflix has always been a subscription-based business. It started that way as a mail-in DVD rental service. However, with such sharp drops of market share, and more importantly to investors, share price, along with what seem to be new services popping up all the time, and sometimes dying (RIP CNN+), Netflix is having to make a drastic change to their model by adding advertising. They need to recoup lost customers and this is a way to do it.