Investing.com -- Netflix (NASDAQ:NFLX) is reworking the terms of its advertising partnership with tech giant Microsoft Corporation (NASDAQ:MSFT) and slashing ad prices, according to a report in The Wall Street Journal on Thursday.
Under the terms of a deal signed last year, Microsoft provides the streaming group with the technology to place ads on the platform. This service is key to Netflix's $6.99 ad-supported subscription option, which it rolled out in 2022 in a bid to help boost subscriber growth and combat fierce competition in the streaming sector.
The pact included an agreement from Microsoft that it would pay a so-called "minimum guarantee," or a promise that it would deliver a large amount of ad revenue to Netflix. This, in turn, would cover some of Netflix's financial risk, according to the WSJ.
Citing people familiar with the matter, the WSJ said Netflix is now working with Microsoft to bring down the revenue guarantee. It added that some Netflix executives are frustrated that Microsoft has failed to sell more ad inventory. The company is also in preliminary discussions to sell ads through other partners, the WSJ reported.
Elsewhere, some ad buyers have recently agreed to pay Netflix around $39 to $45 for every 1,000 viewers, according to the WSJ. Previous reports in the paper said that the fee was previously roughly $45 to $55.
Neither Microsoft nor Netflix immediately responded to a Reuters request for comment.