Netflix may develop its own advertising technology and eschew Microsoft
In 2022, the streaming service Netflix introduced its first-ever ad-supported plan. The company faced backlash over this step. The reason not being too many ads, but the fact that Netflix is providing ad-free services since its beginning. However, the company is not abandoning its ad-support options. In fact, some pieces of information indicate that the company is going to build its own ad tech. If this happens, it indicates that Netflix is going to eschew Microsoft.
Presently, the two companies i.e., Microsoft and Netflix have collaborated regarding the back-end ad tech for Netflix. Microsoft serves as the exclusive sales channel as well as an ad server for Netflix. However, it seems like Netflix is planning to make it in-house. Well, this is good since Netflix would be getting more benefit from the ad revenue as to sharing it with Microsoft. Do note that the current deal between the two companies runs through 2024.
Well, the consumers that are using Netflix’s ad-supported plan won’t be presented with any significant change if the company overtakes the ad serving and selling from Microsoft. However, users might view different types of ads or even more of them. Besides this, the significant change will be reflected in the earnings of Microsoft and Netflix. Well, the terms and conditions of the deal between Microsoft and Netflix are unknown. It is not known whether Microsoft is getting profit per ad or it is receiving a set amount via this contract.
This could also be a reaction to Netflix’s ad-supported plan underperforming expectations. Since this plan was first introduced in November, it is obviously still in the early stages. Yet it isn’t performing exceptionally because of two important factors. One, not all Netflix titles are accessible. Mostly only the ones that are unique. Two, asking customers to pay for a service they have received for years while still seeing advertisements is a hard sell. Since Netflix has never had commercials.
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