Netflix’s Cloud Computing Cost Cutting Could Open the Door for Microsoft

The market-leading streamer is reportedly looking to reduce expenses with longtime partner Amazon Web Services

Eleven (Millie Bobby Brown) in "Stranger Things"
Millie Bobby Brown in Netflix's sci-fi horror hit "Stranger Things" (Netflix)

As Netflix looks to improve its financial situation amid a deceleration of subscriber growth and a loss of $200 billion in market value since November, cloud computing cost-cutting measures could complicate the relationship between the market-leading streamer, its longtime partner Amazon Web Services and its new partner Microsoft.

Netflix, which has lost more than 1 million subscribers in 2022, is looking to “better control cloud computing costs” with longtime partner Amazon Web Services, according to The Wall Street Journal. The company is said to be closely eyeing costs, and particularly looking to tamp down increases, as it aims to grow its subscriber base to 500 million global customers in the next three years. This includes lowering the number of data copies it holds worldwide.

This is particularly noteworthy because Netflix’s unexpected partnership with Microsoft to launch its ad-supported tier later this year could potentially offer an alternative to AWS down the line. Microsoft owns the cloud storage company Azure and while an individual with knowledge of the situation told TheWrap that “nothing has changed in that partnership or the overall approach to infrastructure management” when the Microsoft partnership was first announced, little in the media industry is ever whetched in stone.

The recent emphasis on fiscal responsibility at Netflix and its reported desire to pullback on cloud computing expenses is very likely not in line with AWS’ goals as a business. If Netflix has an opportunity to reduce costs and remove an asset from a rival company while cozying up to a new partner, many within the media industry believe they will take it. Several media analysts relayed to TheWrap at the time of the Netflix-Microsoft announcement that advertising may simply be the first step in a larger migration for the streaming juggernaut.

Netflix is also said to be eyeing cost-cutting across hiring by tapping more junior employees, reining in spending when it comes to merchandise perks, shuttering multiple office spaces and being more economical with its content investments. The company has already laid off more than 400 employees this year.