Netflix to Retire Basic Ad-Free Plan in Favor of Ad-Supported Model
In a surprising move, streaming giant Netflix has announced plans to discontinue its most affordable ad-free tier in several markets, starting with Canada and the UK in the second quarter of 2024. This decision comes on the heels of the company’s success with its ad-supported plan, which has seen a remarkable 70% increase in membership during the fourth quarter of 2023. The move is also seen as a way for Netflix to boost its revenue per user, as the ad-supported tier has proven to be more lucrative.
This announcement follows a series of price hikes and changes to Netflix’s subscription plans. In October 2023, the Premium plan’s price was raised to $23 per month, and the Basic subscription plan was replaced with an ad-supported tier in the US. This was part of the company’s efforts to crack down on password sharing and increase its revenue stream.
Netflix executives have shared plans to expand the retirement of the Basic ad-free tier to other countries following the initial rollout in Canada and the UK. This decision comes after the streaming service ceased new subscriptions to the Basic plan in the US, UK, and Canada in 2023, with the price gradually increasing to $12 per month.
The most economical option for ad-free content on Netflix will now be the $15.49 monthly plan, which provides HD streaming on two devices and offline downloads. The success of the ad-supported plan, priced at $7 per month, has been evident in its higher revenue per user and the significant increase in membership. In fact, the ad-supported tier now constitutes 40% of Netflix’s total sign-ups in markets where it is available, contributing significantly to the streaming service’s global user base of 247 million paid subscribers.
In a video interview, Netflix’s co-CEO, Greg Peters, disclosed that the ad-supported tier boasts 23 million monthly active users, underscoring the company’s commitment to “scale” it as a top priority.
Opinion: The decision by Netflix to retire its Basic ad-free tier in favor of the ad-supported model may be a smart move in terms of increasing revenue and capturing a larger audience. However, some loyal subscribers who prefer an ad-free experience may be disappointed by this change. It remains to be seen how this decision will impact Netflix’s overall user satisfaction and subscription numbers in the long run.