Netflix partners with Microsoft to make its ad-supported choice a reality

Netflix explores an option with commercials on its platform 0:58

New York (CNN Business) --

You'll soon be able to sign up for a cheaper, ad-supported version of Netflix, though that option is still in an "early stage."

Netflix will partner with Microsoft for this new ad-supported subscription plan, the two companies announced Wednesday.

The collaboration follows a surprise announcement from Netflix in April that they were open to offering a lower-cost, ad-supported subscription option, something CEO Reed Hastings had balked at for years.

But the company is in one of its worst stretches in its 25-year history, after Netflix reported its first quarterly subscriber loss in more than a decade.

It hasn't yet been announced when the new subscription category will launch, but The New York Times reported in May that Netflix told employees it could arrive by the end of 2022.

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Netflix said Wednesday that the decision is "in its early days" and that the company has "a lot to figure out" about introducing an ad-supported subscription to its 221.6 million subscribers worldwide.

Microsoft's formidable ad sales division will be bringing that option to life.

Greg Peters, Netflix's chief operating and product officer, said in a statement Wednesday that "Microsoft offers us the flexibility to innovate" in both technology and sales, while also ensuring strong privacy protections for Netflix subscribers.

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Netflix's long-term goal is clear: "greater choice for consumers and a better-than-TV experience for advertisers," he added.

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Netflix reported in April that it had lost 200,000 subscribers in the first quarter of 2022 and expects to lose an additional 2 million in the second quarter.

This news led to the fall of its shares and the fear of investors not only for the future of Netflix, but for the streaming business in general.

Netflix will report its second quarter earnings on Tuesday and all eyes will be on the number of subscribers.

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