Netflix is phasing out a streaming plan later this year in a bid to drive subscribers to other tiers.
The 11.99 a month ad-free Basic plan will be ditched in spring, forcing customers to pay more for its other ad-free plans – $15.49 for the Standard option or $22.99 for Premium. They will also have the choice downgrade to the $6.99 ad-supported plan.
The streaming giant is starting in Canada and the UK, ‘and taking it from there,’ reads Netflix’s fourth-quarter shareholder letter.
Despite vowing never to feature advertising for years, ads have become a key revenue stream for the company. Ad plans account for 40 percent of Netflix’s new sign-ups.
The 11.99 a month ad-free Basic plan will begin its demise in the spring, forcing customers to pay $15.49 for the Standard option, $22.99 for Premium or downgrade to the $6.99 ad-supported plan
‘In Q4’23, like the quarter before, our ads membership increased by nearly 70 percent quarter over quarter, supported by improvements in our offering (e.g., downloads) and the phasing out of our Basic plan for new and rejoining members in our ads markets,’ reads the letter.
Co-CEO Greg Peters said in a video interview for investors that Netflix is growing its marketing efforts by making ad plans more attractive, engaging partner channels and shifting pricing structures ‘where we see it is appropriate.’
Peters continued to explain that the ad-supported tiers are designed to be a better overall value for members than the Basic plan.
The announcement of the Basic plan being axed came with news that Netflix added 13 million new subscribers at the end of 2023. That brings Netflix’s total subscriber count to over 260 million, firmly cementing it as the most popular streaming service in the world
With the ad plan, customers ‘get a better plan than Basic, more streams, higher resolution with downloads. And of course, the real benefit is they get access to all these amazing stories at a lower effective price.’
They are also improving targeting, launching more ad programs and partnerships with ads, which is likely why Netflix is pushing for its cheaper $6.99 tier.
Netflix still has ‘years of work ahead of us,’ before its advertising business becomes a viable revenue source, Peters admitted.
‘Our top ads priority… is scale,’ he said.
The announcement of the Basic plan being axed came with news that Netflix added 13 million new subscribers at the end of 2023.
That brings Netflix’s total subscriber count to over 260 million, firmly cementing it as the most popular streaming service in the world.
