By Rishabh Jaiswal and Bharat Govind Gautam
(Reuters) – Netflix is restructuring its advertising partnership with Microsoft for its lower-priced ad-supported subscription plan and is also cutting ad prices, the Wall Street Journal reported on Thursday.
The streaming company launched the $7-per-month plan with commercials last year in 12 markets, including the U.S., to attract more customers and selected Microsoft as its technology and sales partner for the offering, partly because it offered to pay a revenue guarantee, the report said.
Netflix is now reworking the agreement to reduce the revenue guarantee due to slowing growth of the ad tier, the report said, adding that company executives are frustrated that Microsoft has not sold more ad inventory.
In addition, Netflix has held early discussions to sell ads through other partners apart from Microsoft, and has also offered them better deals, the report said.
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, WSJ said.
Microsoft declined to comment, while Netflix did not immediately respond to a Reuters request for comment.
Last week, the video-streaming company reported a lackluster revenue rise which sparked concerns of a longer road to growth from its new initiatives, with co-CEO Greg Peters cautioning it would take “several quarters” to see returns from those efforts.
