Microsoft has become an advertising partner of Netflix

Software manufacturer Microsoft Corp. (MSFT) became a partner of the streaming service Netflix Inc. (NFLX) in the field of advertising. The leader of streaming services held talks with several technology giants but preferred Microsoft. Probably in favor of such a choice was the absence of a conflict of interest, as with other companies that have streaming services. Microsoft and Netflix will cooperate in a new direction for the streaming service — the advertising business. 

Soon, the company plans to launch a version of its streaming service that is supported by ads. This version will make full use of Microsoft’s skills in advertising technologies and sales and marketing. Microsoft will rely on its existing advertising business based on the Bing search engine and the MSN portal. In addition, the recent acquisition of Xandr will provide some essential connected TV advertising technologies. Microsoft operates a significant advertising business, although its annual revenue of $10 billion is incomparable with the advertising revenues of such giants as Google or Meta Platform. 

But cooperation with Netflix can become a growth driver for Microsoft in the fast-growing digital video advertising market. According to analysts at MoffettNathanson, Netflix can bring in more than $1 billion in advertising sales worldwide in just a couple of years. And although the process of implementing a streaming service application with advertising is likely to take time, in the end, it will be advantageous for both companies. For Microsoft, it is crucial to enter the growing advertising market in streaming services.