Netflix is in crisis. On Tuesday evening he is likely to announce again that he has lost users. An advertising deal with Microsoft should turn the tide – and possibly radically change the program portfolio.

.On a Thursday evening at the end of May, the Empire State Building in New York lights up in unusual colors: lots of red, black shadows flicker in between, a creature that moves, lightning that flashes. On the rooftop bar 230 Fifth directly opposite, visitors hold their smartphones in the air to film the spectacle. 80s music blares from the speakers – and conveys the feeling of the time in which the Netflix hit series “Stranger Things” takes place.

The light show on New York’s second tallest building and landmark isn’t the only marketing event Netflix is ​​paying for at the start of the fourth season of the hit series: A red hole with black tentacles gapes on a beach in Sydney – the transition to the parallel world of Stranger Things . The Kuala Lumpur Tower in Malaysia is also illuminated, as is a castle in Kraków, Poland.

For Netflix, “Stranger Things” and the marketing efforts are a success: on the first weekend alone after the release of the first seven episodes of the fourth season, almost 287 million hours were streamed – the strongest US premiere weekend for Netflix ever.

But the success of the science fiction mystery series, in which a parallel world full of monsters opens up under the fictional small US town of Hawkins, cannot make up for the poor state of Netflix: In the first quarter of 2022, the streaming provider lost subscribers for the first time in ten years , 200,000 in number. Tesla boss Elon Musk also criticized Netflix as “unwatchable”.

The figures for the second quarter, which Netflix will present this Tuesday evening after the market close, are expected by analysts to be weak. The streaming provider has already announced that another two million subscribers are likely to jump off. Netflix now wants to save itself with advertising – and is getting Microsoft on board.

Netflix promotional offer with Microsoft
Just over a week ago, the streaming group announced that it would be collaborating with Microsoft as a technology and sales partner with immediate effect. The basic idea: Netflix without advertising is still available, but users then pay less for the offer with advertising. Netflix CEO Reed Hastings was actually against advertising for a long time, but the loss of users and increasing competition seem to leave no other way out. For comparison: Netflix recently had almost 222 million users worldwide – its competitor Disney Plus, which has only been around since the end of 2019, now has 138 million users.

According to media reports, Netflix is ​​said to have previously considered Google and the owner of the broadcasting chain NBC as partners. But both are direct competitors of Netflix with their content, such as Google’s YouTube. With Microsoft, Netflix is ​​now cooperating with a partner that does not have its own streaming service on the market. In the advertising business, the company cannot compete with Google or Meta, but advertising at Microsoft now accounts for more than ten billion US dollars, accounting for six percent of sales. In addition, the group announced at the end of last year that it would buy Xandr, an advertising platform that previously belonged to the American telecommunications group AT&T.

Gaming also on Netflix?
The 100 million gaming customers who are traveling in Microsoft’s Xbox universe should be particularly interesting for Netflix in this deal. You can then simply sprinkle them with Netflix, says Axel Oppermann from the IT market observer Avispador. And thus have access to a special target group via the deal.

Because Netflix plans to enter the gaming market more intensively in the future. The core business, i.e. the streaming of films and series, is becoming increasingly difficult for the company: More and more competitors are entering the market, many of them cheaper than Netflix. It also makes it harder for Netflix to get licenses for popular series and movies from other producers.

A few years ago, Netflix began to approach the gaming market with interactive films and series. With the “Netflix Games”, the company now wants to build its own gaming empire. The group is thus advancing into an industry that generates annual sales of 200 billion dollars. This would make Netflix a kind of competitor to Microsoft, but both companies could complement each other in the field of intellectual property: Netflix series could be turned into Xbox games, for example. Games, for example from the manufacturer Activision Blizzard, which Microsoft wants to buy for 70 billion US dollars, could then become Netflix series.