Netflix said to tweak Microsoft deal, lower ad prices to boost growth
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Netflix (NASDAQ:NFLX) has reportedly reworked its advertising deal with Microsoft (NASDAQ:MSFT) slightly more than a year after it signed the original pact in an effort to boost growth.
Los Gatos, California-based Netflix (NFLX) is tweaking its deal with Microsoft, which initially offered a "revenue guarantee" to the streaming giant to reduce the guarantee, The Wall Street Journal reported. The company has also had preliminary discussions to sell ads from other companies, the news outlet added.
Netflix (NFLX) has also lowered the prices for advertisers, charging them between $39 and $45 for roughly 1,000 views in recent deals, down from a range of $45 to $55, The Journal added.
Some Netflix executives have expressed displeasure that Microsoft (MSFT) has not sold more ad inventory, The Journal continued, citing people familiar with the matter.
Despite those issues, executives at the streaming giant have publicly said that the average revenue per member on the advertising-supported tier was at least as high as that on the standard ad-free tier.
Netflix (NFLX) reported weaker-than-expected second-quarter results and guidance this month that caused a sharp sell-off in the stock.
On the company's most recent earnings call, Netflix (NFLX) co-CEO Greg Peters said that paid sharing, where households pay additional costs for members outside their household, is the key to boosting revenue this year.
Earlier this month, Netflix (NFLX) reportedly spoke to ad buyers about boosting its advertising capabilities, including targeting and different formats such as "episodic" campaigns that would let consumers see ads related to one another.
In March, it was reported that Netflix (NFLX) was considering alternatives to using Microsoft (MSFT) for the advertising tech for its ad-supported subscription, including going at it alone.
Netflix (NFLX) shares rose 0.7% in pre-market trading on Thursday.
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