Netflix is making changes to the advertising partnership it entered into with Microsoft in July last year.
According to Reuters, quoting a report in WSJ, the streamer is also cutting ad prices.
The reports adds that Netflix originally selected Microsoft as its technology and sales partner partly because it offered to pay a revenue guarantee. Netflix is now reworking the agreement to reduce the revenue guarantee due to slowing growth of the ad tier, with the company frustrated that Microsoft has not sold more ad inventory.
Furthermore, Netflix has held early discussions to sell ads through other partners apart from Microsoft, and has also offered them better deals. Some advertisers have agreed to pay Netflix roughly $39 to $45 per 1,000 viewers in recent deals, according to ad buyers, down from around $45 to $55.
As previously reported by Broadband TV News, in its latest (Q2) results Netflix reported that although its ad plan membership had nearly doubled since the previous quarter it is still off a low base and current ad revenue isn’t yet relevant for the company.
