Netflix Cuts Ad Prices, Restructures Partnership With Microsoft: Report

Netflix is restructuring its advertising partnership with Microsoft for its lower-priced ad-supported subscription plan and is also cutting ad prices, the Wall Street Journal reported on Thursday.

The streaming company launched the $7(roughly Rs. 560)-per-month plan with commercials last year in 12 markets, including the US, to attract more customers and selected Microsoft as its technology and sales partner for the offering, partly because it offered to pay a revenue guarantee, the report said.

Netflix is now reworking the agreement to reduce the revenue guarantee due to slowing growth of the ad tier, the report said, adding that company executives are frustrated that Microsoft has not sold more ad inventory.

In addition, Netflix has held early discussions to sell ads through other partners apart from Microsoft, and has also offered them better deals, the report said.

Some advertisers have agreed to pay Netflix roughly $39 (roughly Rs. 3,100) to $45 (roughly Rs. 3,600) per 1,000 viewers in recent deals, according to ad buyers, down from around $45 to $55 (roughly Rs. 4,500), WSJ said.

Microsoft and Netflix did not immediately respond to Reuters’ request for comment.

Last week, the video-streaming company reported a lackluster revenue rise which sparked concerns of a longer road to growth from its new initiatives, with co-CEO Greg Peters cautioning it would take “several quarters” to see returns from those efforts.

© Thomson Reuters 2023