In order to provide users with a less expensive subscription option that includes advertisements, Netflix has partnered with Microsoft.
The industry leader in streaming claims that the service will be a “addition” to its current subscriptions, which are free of advertisements.
How much the business intends to charge customers for the new service is still a secret.
After reporting its first subscriber decline in more than ten years and making hundreds of job cuts earlier this year, Netflix made the announcement.
Netflix: Have we had enough?
Stranger Things will have a play and a television series.
Between January and March, it lost 200,000 users as opposed to the 2.5 million analysts had predicted the company would gain during that time. Additionally, Netflix now anticipates losing an additional two million subscribers between April and June.
The business announced that it had chosen Microsoft as its exclusive global sales and advertising technology partner to launch a “lower priced ad-supported membership plan.”
In a statement, Netflix’s chief operating officer Greg Peters stated, “It’s really early, and we have a lot to work through.
“However, our long-term objective is obvious. More options for consumers and superior brand experiences for advertisers on linear TV.”
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Netflix never wanted commercials, according to the analysis box by North American technology reporter James Clayton. The foundation of its entire business strategy was monthly subscriptions.
However, Netflix officials were forced to disregard their own policies.
It follows horrendous data that revealed the corporation was losing subscribers.
Additionally, as a result of the high cost of living, households have had to tighten their budgets and have begun to consider their Netflix subscription as a potential savings. Investors have becoming uneasy.
In addition, Netflix faces stiff competition from services like Apple TV, Disney+, HBO Max, and Amazon Prime.
There aren’t enough paying subscribers to go around, and there are too many possibilities.
In order to react, Netflix is developing a less expensive version that will include advertisements and will launch later this year.
A similar business strategy is used by Spotify, which offers free music in exchange for watching ads.
It is hoped that by accepting commercials, Netflix can draw in more customers.
However, the decision also demonstrates that advertisements, which were considered by high-end streaming firms to be so passé just a few years ago, are still very much alive and well.
The Wall Street Journal reported on Tuesday that Netflix is attempting to restructure its contracts with significant entertainment companies so that it can include advertisements in its service.
According to reports, the company has talked with Sony Pictures Television, Universal, and Warner Bros.
Warner Bros. opted not to respond. A BBC request for comment was not immediately answered by Universal or Sony.
Netflix’s market value was reduced by $50 billion in April after the firm revealed the unexpected decline in subscribers, the first since October 2011.
The business reported losing 700,000 users as a result of shutting down its service in Russia, despite having gained millions of subscribers during Covid lockdowns. It also cited consumers who shared their Netflix password with others as a cause of the rivalry from rivals.
The business announced 300 job losses last month as it struggled with the decline in consumer volume.
Also in the past month, Netflix’s co-CEO Ted Sarandos stated that the company was in discussions with a number of businesses to identify ways to appeal to customers who were price-conscious.
“Netflix as it currently exists won’t get any more advertisements. For those who say, “Hey, I want a lower price and I’ll watch advertisements,” we are adding an ad tier “Speaking to a crowd at a conference in Cannes, Mr. Sarandos said.