Netflix with ads is coming, but it's 'early days'

New York
CNN Business
—

Soon you'll be able to sign up for a cheaper version of Netflix with ads, though that option is still in its "starting time".

Netflix is ​​working with Microsoft on this new ad-supported subscription, the two companies announced on Wednesday.

The partnership follows the surprise announcement in April that Netflix (NFLX) would be open to adding a lower-priced ad-supported tier to its service — something its CEO Reed Hastings opposed for years. But the company is going through one of the toughest periods in its 25-year history, after losing subscribers in the first quarter for the first time in more than a decade.

The timing of the ad tier's launch has not been formally announced, but the New York Times reported in May that Netflix told employees it could come by the end of 2022.

Netflix said on Wednesday that the move is in "very early days" and that the company has "a lot of work to do" when it comes to introducing an ad tier to its 221.6 million subscribers worldwide.

Microsoft's formidable ad sales unit will bring that new level to life. Greg Peters, Netflix's chief operating officer and chief product officer, said in a statement Wednesday that "Microsoft provided the flexibility to innovate" in both technology and sales, promising strong privacy protections for Netflix members.

Netflix's long-term goal is clear: more choice for consumers and a premium, better-than-linear TV brand experience for advertisers, he added.

In April, Netflix reported it was losing 200,000 subscribers in the first quarter of 2022 and expects to lose another 2 million in the second quarter. That news led to a fall in shares — and scared investors for not just the future of Netflix, but the entire streaming business in general.

Netflix will report its second quarter earnings on Tuesday and all eyes will be on the subscription numbers.