Netflix lost nearly another million subscribers in the second quarter of 2022, but hopes the launch of a new tier of ad-supported streaming in partnership with Microsoft early next year can boost the crecimiento.

The new budget service will launch in early 2023, from various regions with the highest ad spend. This will join the existing ad-free base tier as well as the paid premium and standard subscription plans.

Netflix COO Greg Peters told analysts on the company's earnings call yesterday that "all of the ads that run on our ad-supported offering will come through Microsoft. So that's an exclusive deal with them."

Forrester Research Director Mike Proulx believes this reversal of ad hosting on its platform is largely due to increased competition in the market, as Amazon Prime Video, Disney+ and a host of new streaming platforms they continue to pressure Netflix.

“Competition has forced Netflix to reverse its longstanding stance against ads. When the company launches its ad-supported tier in early 2023, it will offer cost relief to its ad-tolerant users who feel price pressure while attracting new price-conscious users who have been hesitant to pay a premium price." said. .

Subscriber losses below expectations

Netflix still lost 970,000 subscribers in the quarter, which is less than the 2 million losses the streamer announced last quarter. Now he has 221 million subscribers.

It also reported revenue of €8bn for the quarter, up 9% year-over-year, on a profit of €1,6bn.

Co-CEOs Reed Hastings and Ted Sarandos pointed to the final season of hit TV show Stranger Things as a key factor in curbing subscriber losses, during a call with analysts.

Still, Hastings admitted that it was "difficult in some ways, losing 1 million [subscribers] and calling [that] a success."

Why did Netflix choose Microsoft?

Microsoft's "technical ability" has been identified as a key factor in its selection as Netflix's ad technology partner on alternative platforms such as Google Cloud or Roku.

"This is an opportunity to work together to collaborate and develop technical capacity, expertise and go-to-market approach," said Peters.

Peters also tried to clarify that this deal with Microsoft won't affect Netflix's longstanding relationship with Amazon Web Services.

“We have not changed our focus on AWS as a cloud infrastructure partner,” he said. “He doesn't rule out any of that. But you should think it's a great ad partnership deal after all.

Copyright © 2022 IDG Communications, Inc.

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