The partnership follows the surprise announcement in April that Netflix ( NFLX ) would be open to adding an ad-supported lower price tier to its service — something CEO Reed Hastings resisted for years. However, the company is going through one of the toughest periods in its 25-year history, having lost subscribers in the first quarter for the first time in more than a decade. The timing of the ad-level rollout hasn’t been officially announced, but the New York Times reported in May that Netflix told employees it could come by the end of 2022. Netflix said Wednesday that the move is in “very early days” and that the company has “a lot of work to do” when it comes to introducing a layer of ads to its 221.6 million subscribers worldwide. Microsoft’s formidable ad sales unit will bring this new tier to life. Greg Peters, Netflix’s chief operating officer and chief product officer, said in a statement Wednesday that “Microsoft has offered the flexibility to innovate” in both technology and sales, as well as promising strong privacy protections for Netflix members. “Netflix’s long-term goal is clear: More choice for consumers and a premium, better-than-linear TV brand experience for advertisers,” he added. In April, Netflix reported that it lost 200,000 subscribers in the first quarter of 2022 and that it expects to lose another 2 million in the second quarter. That news sent shares tumbling — and worried investors not only about Netflix’s future, but the entire streaming business as a whole. Netflix reports second-quarter earnings on Tuesday, and all eyes will be on its subscription numbers.
