Netflix team up with Microsoft for cheaper plan

Netflix has teamed up with Microsoft to offer a cheaper subscription plan to customers that will show adverts.

The streaming giant says the service will be an "addition" to its existing plans, which do not include adverts.

In April, shares in Netflix slumped after it reported its first subscriber loss in more than a decade.

Last month, co-chief executive Ted Sarandos said the company was in talks with other businesses to find ways to appeal to price-sensitive audiences.

The firm has not yet revealed how much it planned to charge customers for the new service.

On Thursday, Netflix said it had selected Microsoft as its global advertising technology and sales partner to introduce a "lower priced ad-supported subscription plan".

"Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering," Netflix's chief operating officer Greg Peters said in a statement.

"More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members," he added.

Mikhail Parakhin, the president for web experiences at Microsoft, said customers will soon have "more options to access Netflix's award-winning content".

"Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory. All ads served on Netflix will be exclusively available through the Microsoft platform," he said.

Netflix never wanted ads. Its entire business model was built around monthly subscriptions.

Yet Netflix executives have had to rip up their own rules.

It comes after terrible figures showed that the company was losing subscribers.

And the cost of living crisis has meant that households, tightening their belts, have looked at their Netflix subscription as a potential saving. Investors have been spooked.

Netflix also has huge competition from the likes of Amazon Prime, HBO Max, Apple TV and Disney+.

There are too many options and not enough paying subscribers to go around.

To adapt, Netflix is creating a cheaper service - with adverts - that it says will be rolled out later this year.

Spotify has a similar model, where music is free if you're happy to sit through commercials.

The hope is that Netflix, by embracing ads, will attract new audiences.