Netflix named Microsoft as its partner for ad-supported services on Wednesday.
Stranger Things streamer announced in April that it was planning to roll out an ad-supported tier after years of resisting the move.
“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 “Stranger Things” streamer, announced in April that it was planning on rolling out an ad-supported tier after years of resisting the move.
Co-CEO Reed Hastings has long been opposed to 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.
Netflix has been interviewing potential partners for the past several months, 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 (NBCUniversal is the parent company of NBC News).
Netflix is slated to release quarterly earnings Tuesday. It had previously warned it could lose 2 million subscribers during the second quarter. Netflix shares have dropped more than 70% year-to-date.
The new business is a boon for Microsoft’s advertising division, which contributes 6% of the software company’s total revenue.