Netflix has chosen Microsoft as its partner for a cheaper ad-supported subscription plan, the companies announced Wednesday, as the streaming giant seeks to reverse a drop in subscribers after its shares have cratered about 70% since the start of the year.
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Netflix COO Greg Peters said in a statement Microsoft will work with the streaming service on technology and sales, adding it chose Microsoft partly because the company offers strong privacy protections.
Peters said the ad-supported tier is still in the “very early days” with “much to work through,” though the New York Times reported in May the company told employees the tier could roll out by the end of this year.
Netflix stock faced a significant sell-off after the streaming company’s first-quarter earnings report in April, which revealed Netflix had lost about 200,000 subscribers—the first loss in over a decade, and well below the 2.7 million net additions expected by analysts. Netflix blamed the decline on password sharing and increased competition from other streaming services. Netflix has laid off hundreds of employees over the past few months, and analysts warned it could take years for Netflix to implement its plan to recoup the subscriber losses. While Netflix’s co-CEO Reed Hastings had long been opposed to adding commercials to the streaming platform, Netflix reversed course in April and said it would introduce a lower priced, ad-supported tier.
