Netflix might build its own Advertising Tech, and cut out Microsoft

Netflix launched its first ad-supported plan last year, which has been met with a lot of backlash. Not because the ads are bad or there’s too many ads. But because it’s barely cheaper than the ad-free plan, and Netflix had been ad-free since the beginning. But Netflix isn’t giving up on its ad-supported options, and in fact, it might be looking to build its own advertising tech, and cut out Microsoft from the equation.

Currently, Microsoft has a deal with Netflix, and it has built the back-end advertising tech for Netflix. Allowing it to sell ads on the platform. Microsoft is Netflix’s exclusive sales channel and ad server for the service. But Netflix wants to bring that in-house. There’s good reason for that too. As it would mean Netflix gets to keep more of that ad revenue, versus having to share with Microsoft.

Netflix’s current deal with Microsoft runs through 2024.

This will mean very little for customers

Those on Netflix’s ad-supported plan (and plans in the future), won’t see much of a change if Netflix does take over the ad serving and selling from Microsoft. If anything, you may see different ads, or even more ads. The biggest affect here will be on Netflix and Microsoft’s earnings. It’s unclear what the terms are for Microsoft and Netflix’s deal here. If Microsoft is getting a cut of each ad sale, or if it’s just a set amount they get paid throughout the contract.

This could also be in response to Netflix’s ad-supported plan not doing as well as they had hoped it would. Of course, it is still early for this plan, as it only launched in November. But there are two big things keeping it from doing exceptional. One, not every Netflix title is available. Basically only those that are originals. Two, Netflix has never had ads, so to ask people to pay for a service they’ve had for years, and still see ads, is a tough sell.