Netflix announced that it had teamed up with Microsoft to offer a cheaper subscription alternative with adverts.
The company hasn’t disclosed the new plan’s price but said it would be an “addition” to existing options. Currently, Netflix does not offer services with ads.
The streaming giant announced the partnership after reporting that it had lost more than 200,000 subscribers between January and March, compared to the 2.5 million new users that analysts predicted it would have in that period.
The company expected to lose at least two million more subscribers between April and June, but official reports have not been unveiled.
Netflix described Microsoft as its global advertising technology and sales partner, saying it had chosen the corporation to introduce a “lower priced ad-supported subscription plan.”
In a statement on the decision, Netflix’s chief operating officer Greg Peters said: “It’s very early days and we have a lot to work through. But our long-term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers.”
On Tuesday, the Wall Street Journal reported that Netflix was working to renegotiate the deals it had with major entertainment firms such as Warner Bros., Sony Pictures Television, and Universal to display ads on its services. However, the studios have not responded to requests for comment.
Netflix has struggled to stay afloat after losing subscribers, which caused a loss of $50 billion off its market in April. It was its first subscriber loss in over a decade.
The company, which also lost 700,000 subscribers after shutting down its services in Russia, has blamed password-sharing between users and competitors. Now, it faces huge competition led by Amazon Prime, HBO Max, Apple TV, and Disney+.
Last month, the firm announced a round of 300 job cuts after axing 150 people in May to deal with the drop in subscriber numbers.
Also in June, the company started talks with several companies to find methods to attract price-sensitive audiences, Netflix’s co-chief executive Ted Sarandos said.
Speaking at a conference in Cannes, he explained: “We’re not adding ads to Netflix as you know it today. We’re adding an ad tier for folks who say ‘Hey, I want a lower price and I’ll watch ads’.”
