Netflix turns to Microsoft to help build its new ad-supported service.

Netflix has chosen Microsoft to assist construct its forthcoming ad-supported tier, the streaming big stated on Wednesday.

In April, after asserting in its first-quarter earnings report that it had misplaced subscribers for the primary time in a decade, Netflix unexpectedly stated it might introduce a cheaper providing with commercials to attempt to increase subscription numbers. On the time, Reed Hastings, a co-chief govt at Netflix, stated the corporate would search a 3rd celebration to assist construct the brand new tier. Netflix has by no means had a devoted gross sales and promoting group, and for years had vowed that commercials would by no means seem on its service.

For the reason that announcement, Netflix had talked to plenty of firms a few potential partnership, together with NBCUniversal, Google and the Commerce Desk.

Netflix has additionally informed employees that it hopes to introduce the promoting tier by the top of the yr. The corporate will nonetheless have its commercial-free tier, which is dearer for subscribers.

“Microsoft has the confirmed capacity to help all our promoting wants as we work collectively to construct a brand new ad-supported providing,” Greg Peters, Netflix’s chief working officer, stated in an announcement. “Extra importantly, Microsoft supplied the flexibleness to innovate over time on each the know-how and gross sales facet, in addition to robust privateness protections for our members.”

It has been an unpleasant few months for Netflix. The corporate has laid off tons of of employees members, and its inventory value has gone right into a tailspin. On Tuesday, the corporate garnered fewer Emmy nominations than its rival HBO, regardless of having considerably extra programming than the cable community and its streaming service, HBO Max. Netflix will announce its second-quarter earnings subsequent week, and beforehand stated it may lose one other two million subscribers throughout the quarter.

Netflix executives hope that introducing a lower-priced promoting tier will appeal to cost-conscious subscribers. Some analysts have cautioned that by introducing a less expensive service, the streaming service may cannibalize from its base of subscribers who pay extra for a commercial-free expertise.

“At launch, customers could have extra choices to entry Netflix’s award-winning content material,” stated Mikhail Parakhin, the president of internet experiences at Microsoft. “Entrepreneurs seeking to Microsoft for his or her promoting wants could have entry to the Netflix viewers and premium linked TV stock.”