Maybe you didn’t miss it in the tech news feed: Microsoft announced a strategic alliance with Netflix to create a new type of subscription to consumers, including advertising. The Redmond firm manages the platform to broadcast these upcoming announcements. According to analyst Laura Martin, this deal prefers to hide a more ambitious agreement.
Takeover of vision?
We are pleased that Netflix has chosen Microsoft as its advertising technology and sales partner. We want publishers to have longer-to-use ad monetization platforms, so that more people can access the content they want wherever they are. https://t.co/QmPszxJTOf
– Satya Nadella (@satyanadella) July 13, 2022
On July 13. Satya Nadella revealed on her Twitter account that Netflix has chosen “Microsoft as a business and advertising technology partner”. The SVOD platform makes this combination with the goal of developing a new interface that allows advertisers to be able to touch the heart of the Netflix catalog.
Behind this maneuver, one observation: Netflix has struggled to retain its subscribers as prices have risen over the years and competition, with platforms like Disney +, Paramount + or Hulu, eating up market share . Exclusivity is no longer an argument enough, Netflix is counter-attacking and wants to launch a subscription at a lower price, based on advertising.
“If you want the ad -free option, you can always do that. If you want to pay less and be tolerant of ads, there is an offer for you”, are the words of Reed Hastings, CEO of Netflix. indeed, the platform could not handle this crucial turning point alone and chose Microsoft’s commercial partnership to develop.According to analyst Laura Martin, this was not the primary purpose of this agreement.
A specialist in financial platform activities, Ms. Martin says that in the end, “Netflix may be looking for an exit”. An exit means “buy” according to the Needham analyst for an interview with Yahoo Finance. According to him, the fact of choosing Microsoft, rather new in the field of advertising, was a choice against the grain of reason and aimed under the management of the Redmond company, before a possible acquisition .
Netflix is trying to approach Microsoft in the hope that after Microsoft melts down its acquisition of Activision, it will come back and buy Netflix eventually. Netflix announced three months ago on a revenue conference call that it had already started advertising – it hadn’t even hired an advertising sales manager. The idea that no one in the empire was an advertising expert, when they chose an advertising partner for the technological side, to do things backwards.
So Laura Martin doesn’t seem to believe in a partnership with the intent to promote Netflix, even if one of its executives announced in Microsoft’s news release that despite the deal, “it’s too early and there’s still a lot to do. “. When viewed from this angle, this collaboration seems unlikely as it stands and could call for the acquisition of Microsoft’s SVOD platform, the two companies have always been close.
The documentary Xbox – Power We also want to remind you that without the Xbox 360, Netflix could not have been the success we have known for many years now. Amid the change, the movie rental company chose the Xbox as its preferred companion, before getting Microsoft’s inspiration to develop its Xbox Game Pass. Repurchasing each other will therefore, effectively, be an equal decision between two long-time collaborators who have everything to gain from it.