The partnership between Netflix and Microsoft could potentially change the competitive landscape of the streaming industry by introducing a new revenue model for Netflix. This could allow Netflix to offer more competitive pricing or invest more in original content, which could attract more subscribers and challenge other streaming services. Additionally, Microsoft's extensive reach and technological capabilities could enhance Netflix's advertising capabilities, making it a stronger competitor in the ad-supported streaming market.
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Why did Netflix choose Microsoft as its ad partner? On Netflix's Q2 earnings call, the company announced it lost 970,000 subscribers. This was Netflix's second straight quarter of subscription losses, after it lost 200,00 in Q1. To make up for this lost market share, Netflix needed a plan: and that plan became the launch of an ad-supported version. A few months later, Netflix had a partner to run these ads: Microsoft.