Netflix cuts ad prices, rethinks Microsoft deal in pursuit of growing revenue

In a strategic move aimed at reshaping its advertising landscape, Netflix is set to restructure its partnership with tech giant Microsoft, inciting significant changes to their existing contract in accordance with a report by the Wall Street Journal (WSJ).

Additionally, Netflix is rumored to be in early discussions with other possible advertising partners, signalling a potential shift in the streaming giant's go-to-market strategy.

The partnership with Microsoft was forged in 2022, when the streaming company launched a US$6.99-a-month ad-supported option, and initially involved Microsoft providing technology services and acting as an advertising intermediary for Netflix. A key factor behind Netflix's decision to collaborate with the tech giant was the promise of a "revenue guarantee," with the latter pledging to deliver a substantial revenue return for the streaming company.

However, as part of the restructuring, Netflix is now seeking to lower ad prices and potentially reduce the previously agreed-upon guarantee.

Negotiations between the two companies are ongoing, as they aim to reach new terms that align with the streaming company's evolving advertising objectives. While the specifics of the revised deal remain under wraps, the WSJ report suggests that Netflix has expressed interest in exploring additional advertising partnerships beyond what already exist.

The move could open up new avenues for advertisers and grant Netflix access to a wider range of vendors and technologies, as the streaming industry becomes increasingly competitive. 

More to come as this story develops.