Netflix selects Microsoft as tech partner to build out its ad-supported subscription tier

Netflix has appointed Microsoft to help it with the roll-out of its first ad-supported subscription plan, which is a lower-cost offering that is being introduced to help the streaming service retain and attract subscribers.

The company has appointed Microsoft as its global advertising technology and sales partner to assist with the build out of the company’s ad-supported subscription tier, although few details have been given about exactly how the pair will work together.

“It’s very early days and we have much to work through, but our long-term goal is clear,” said Netflix chief operating officer Greg Peters in a statement. “More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We are excited to work with Microsoft as we bring this new service to life.”

Netflix announced its plan to launch an ad-supported version of its platform back in April, as part of a series of measures it is undertaking in response to a dip in the number of people subscribing to the service.

“Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering,” said Peters. “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.”

The streaming giant was an early adopter of Amazon Web Services’ (AWS) public cloud infrastructure and remains one of its highest-profile reference customers, having undergone a seven-year push to shutter its datacentres and move all its applications and workloads into the AWS cloud. It completed this process in February 2016.

It is unclear from the partnership announcement whether this deal with Microsoft is likely to alter Netflix’s longstanding “all-in on AWS” status in any way, or if there is a cloud or infrastructure play at work here.

In a separate statement, Mikhail Parakhin, president of web experiences at Microsoft, said the company has been appointed to “power” Netflix’s first ad-supported subscription offering, with all adverts shown on the service served up from a platform it will provide.

“Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory,” he said. “All ads served on Netflix will be exclusively available through the Microsoft platform. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information.”