Netflix wants to introduce a cheaper plan because it lost many subscribers recently.
Streaming video company Netflix will work with Microsoft to include advertisements in their service. The subscription plan with advertisements will be cheaper to attract new customers.
Netflix announced the plan on Wednesday after the company reported it lost subscribers. It’s the first time Netflix lost subscribers in more than 10 years, and it may continue.
Chief Operating Officer Greg Peters says that Microsoft has the ability to help Netflix add advertising to the streaming video service.
Peters also says that Microsoft is flexible and innovative. It will help Netflix with technology, sales, and privacy protection for subscribers.
Microsoft said that advertisers will have access to Netflix’s audience and TV inventory.
It also said that all ads on Netflix will be handled by Microsoft.
Last year, Microsoft earned $10 billion USD from advertisements. It sells advertisements on different services like the Bing search engine and LinkedIn.
Last month, Microsoft bought an online advertising platform from AT&T Inc. With the new platform, Microsoft can sell more advertising space across thousands of websites.
Netflix adding advertising to its services will create some difficult issues. People will be worried about personal data and privacy. Companies use personal data to make customized advertisements.
Netflix probably chose Microsoft because there is not much conflict of interest. Microsoft doesn’t work with any other top streaming services like Amazon.
Netflix made the announcement about its partnership with Microsoft before reporting bad news. After the announcement, Netflix also said that it might lose about 2 million subscribers. The popular show Stranger Things returned, but did not help with keeping subscribers.
Some of Netflix’s competitors, e.g., Hulu and HBO Max, already offer streaming plans with advertisements. Disney+ will also offer a plan with advertisements.
Researcher Comscore Inc. says that lately, more consumers are choosing less expensive services that have advertisements. They want to save money because prices of other goods and services are increasing.
Comscore Inc’s James Muldrow said that now is the perfect time for subscription services like Netflix to try offering services with ads.
Netflix also says it will try to stop subscribers from sharing their login details and passwords with people who aren’t subscribed.
VOCABULARY
- Subscriber – a person who pays regularly (every week, month, or year) to receive a product or service
- Streaming video – to watch video online without downloading it or having a physical copy
- Attract – to cause or make someone like something; entice; lure; pull in; bring close
- Chief Operating Officer (COO) – person in charge of daily operations at a large company
- Innovative – create new ideas; use new or advanced methods; advanced; creative
- Privacy protection – to keep or protect your private information from other people or companies, especially online
- Audience – a group of people watching an event or show; viewers; spectators
- Inventory – the products available for sale or to use; the materials or stock of a business; a list of items in a building or company;
- Platform – an online business that provides a service or connects people and businesses
- Personal data – information about you, e.g., birthday, address; information that is connected to your identity or who you are
- Conflict of interest – a situation where one person can’t trust or work with another person because of their actions (e.g., I work at a pizza restaurant, but on my days off from work, I make pizza and sell it – this is bad for the pizza restaurant and for me)
- Announcement – to make information available to everyone; a declaration; to say to everyone; notification
- Competitor – challenger; opponent; rival; enemy; opposition
Original story from Al Jazeera below:
