Netflix moves beyond Microsoft partnership

Netflix moves beyond Microsoft partnership

Netflix is expanding the number of programmatic partners for advertisers beyond its once-exclusive deal with Microsoft.

Netflix’s president of advertising, Amy Reinhard, announced at the streaming giant’s second annual upfront yesterday that it is expanding its buying capabilities this summer to include Google’s Display & Video 360, The Trade Desk, and Magnite.

The streaming giant is also developing its own in-house adtech platform to give advertisers new ways to buy and measure ads. The company says it is eyeing a launch date for it by the end of 2025.

“Bringing our adtech in-house will allow us to power the ads plan with the same level of excellence that’s made Netflix the leader in streaming technology today,” said Reinhard.

Analysis: Microsoft sidelined

Netflix first announced it was investing in its own sales team and technical infrastructure “to complement Microsoft’s capabilities” last October.

Earlier, in July 2023, The Wall Street Journal reported the streaming giant was looking to “restructure” its partnership with Microsoft after the company said it would struggle to fulfil an agreed to “revenue guarantee” because demand for Netflix with Ads had been lower than expected.

For Netflix, attempts to integrate ads into its streaming service have been at times tumultuous. The company rushed to announce its move into advertising in response to declining subscription numbers in the spring of 2022, and thus had to turn to third parties rather than develop its own ad stack to quickly launch the ad tier.

Netflix is now two companies rolled into one

Microsoft won the competition to be Netflix’s global tech and sales partner, but the relationship has gone downhill over time, resulting ultimately in Netflix now moving beyond Microsoft to be inclusive of other demand-side platforms.

By expanding the number of programmatic partners, Netflix’s ad inventory will become a more standard media buy.

User growth momentum

Reinhard also revealed Netflix’s ad plan has continued its strong momentum in user growth. The ad tier now has 40 million global monthly active users, up from 5 million this time last year and 15 million last November. According to Reinhard, in countries where the ad tier is available, 40% of new Netflix signups are for the ads plan.

“We’re being incredibly strategic about how we present ads because we want our members to have a phenomenal experience,” she said. “We conduct deep consumer research to make sure we stay ahead of the competition, bringing opportunities that are better for members and better for brands.”

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The streaming giant further revealed that of its ad-supported members, over 70% use the platform for more than 10 hours a month.

The company appears to be betting that an increase in live content will continue to drive users to the platform for either its ad-free or ad-supported tiers. Netflix will exclusively stream Christmas-day NFL games this year and has increasingly leaned into live comedy shows such as through its Netflix is a Joke Festival earlier this month.

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