Much has been made about the union of Netflix, the company that used to lecture you like a librarian about not getting more content until the DVDs on your coffee table were returned, and Microsoft, the company that seems to have been born on third base yet, has to get bunted in for the run.
OK, that’s unfair. Microsoft is a prolific company at the heart of most enterprise and household computing platforms. Except for mine. There’s not a stitch of MS anything on my Mac, and there ain’t ever going to be. There’s a single PC tower in our household that sits like an ancient ruin of a lost civilization which on occasion is used by someone, for something, so it stays plugged in. The Chromebook from school for homework and long-term assignments and the super fast, lightweight, extra crisp 4K monitored one I bought for my spouse are the work-from-home workhorses.
But what of this partnership for ads on Netflix? Does anyone really know what this will mean for consumers, advertisers, or the companies themselves? Not really, but it’s so much fun to pile on with prognostications because, in the tech industry, this is the lubricant that enables a few experts, conference planners, and online publishers to blithely feed their content machines. And there’s very little downside to making some kind of statement in an industry that suffers from such acute short-term memory loss that it never bothers to notice that the bold 18-month product roadmap plans it announced in 2015 still haven’t been met.
But I’m not writing this for the industry, plenty of ink has already been spilled about this engagement, and it’s a wonder it hasn’t appeared in the New York Times society pages instead of the Business Section. So instead, I’m writing this for the future Mr. & Mrs. connected homebodies who will have to navigate the spawn of this union.
For its part, Microsoft has made moves into advertising technology before, buying one of the more innovative video tech platforms called Navic more than a decade and a half ago. In addition, they recently purchased the lovable mutt called Xandr, renamed when it was adopted by AT&T, who just couldn’t pronounce AppNexus without someone in Bedminster, NJ, yelling “bless you” from down the hall. Couple that with a few dozen other less well-remembered ad-intended acquisitions (A Quantive, anyone?), and eventually, all that spending likely threw off some IP and institutional knowledge that is worth something.
Whenever I hear about an adtech acquisition by a massive telco or tech behemoth, I am reminded of the old joke about the young actor with a breakout performance who is signed to The William-Morris Agency and promptly never heard from again.
What is likely at the center of this coupling is a mutual love of recurring revenues. Think your cable provider, the electric company, or the IRS. Windows and its bloated app children don’t come in a box anymore, and it’s an online service that reminds you of the limitations of their engineering with an endless cycle of updates, security patches, and just for nostalgia: the occasional blue screen of death when your 256GB of RAM just can’t handle MS-Word. So you aren’t a customer in the retail sense anymore. Instead, you are an ever-present source of sustenance like Neo and Trinity in The Matrix.
Netflix loves this model more than most. They are the undisputed champions of charging more for less and less content. What used to be a great value proposition: removing the tedium and disappointment of the video discovery experience is now a commonplace offering that almost any well-known media brand can manage to make a business of…unless you’re CNN+.
What lies ahead is likely an amalgam of the very latest whiz-bang tech that, like Life Cereal, is “supposed to be good for you” but still tastes like you ate your driveway. To stop password sharing, your Octogenarian grandparent may have to break out her smartphone and squint through her bifocals to see the code generated by the Microsoft Authenticator to watch the latest episode of Law & Order – Bake Off. Likewise, to rent a film, you will probably have to deactivate your Mojang profile and allow your Microsoft Family account to permit violence, rough language, and subtitles. (For anyone who yearns for the days when Minecraft was simple and fun to use, I see you.)
Microsoft will gain a foothold in Los Gatos and will attempt to rename it Los GatesOS.
So Netflix will get a recurring revenue stream they have never had before from advertising and probably degrade the customer experience of just trying to use the platform so thoroughly that it may well drive premium subscription upgrades en masse. Microsoft will gain a foothold in Los Gatos and will attempt to rename it Los GatesOS.
Either way, nobody will remember what I or anybody else thought would happen 18 months from now, and I’ll have another tech alliance news story to parody.