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What just happened? After months of speculation, Netflix recently confirmed plans for a cheaper ad-supported tier, but the company would need a partner to help deliver those ads. This week, it announced that it chose Microsoft. Most of Netflix's competitors already have ad-supported membership options.
Microsoft and Netflix have announced that advertisements for Netflix's upcoming cheaper ad-supported tier will all come through Microsoft's advertising platform. The companies' statements end a string of rumors surrounding Netflix's ad plans.
In April, Netflix confirmed plans to offer an ad-supported subscription sometime in 2022, reversing earlier statements against the idea. A first-quarter financial report showing the first loss of subscribers in a decade might have encouraged the decision, as the company laid off staff in response.
Previous reports speculated that Netflix might work with Google or NBCUniversal to deliver ads or that it could even purchase Roku to accelerate those plans. Adopting an ad-supported tier would bring Netflix in line with competitors including Hulu, HBO Max, Paramount Plus, and Peacock, with Disney+ also embracing the trend this year.
This week's announcements don't reveal details on what Netflix's ad-supported tier might look like, when it will launch, or how much it would cost. Netflix currently starts at $10 a month. HBO has similar pricing with ads, and Disney+ is $8 without ads. Netflix's ad-supported price would need to compete with Hulu's $7 ad tier and Paramount Plus's $5 ad tier.