Netflix named Microsoft as its partner for its ad-supported service.
The “Stranger Things” streamer, which has been struggling to retain and add subscribers, 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 interviewed 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.
The new business is a boon for Microsoft’s advertising division, which contributes 6% of the software company’s total revenue.
The Bing search engine, where Microsoft picks up revenue by showing ads in search results, is not as popular as Alphabet’s Google, and in 2015 Microsoft exited the display-ad market as Aol took on that unit.