Netflix has made a significant change to its streaming plans in the U.S. and the U.K.
The company has decided to discontinue its cheapest plan, known as the Basic plan, which did not include ads.
This move is part of their strategy to encourage price-conscious customers to opt for their ad-supported package.
Previously, the Basic plan allowed users to stream content on a single device for $9.99/month in the U.S. and £6.99/month in the U.K.
However, it is no longer availablele to new or returning subscribers in these countries. Existing Basic plan members can continue with their current plan until they decide to switch to a different plan or cancel their account.
The aim behind removing the Basic plan is to promote the adoption of Netflix’s ad-supported Standard With Ads plan, which was introduced last November.
Since its launch, the company has managed to attract over 5 million subscribers to its ad-supported plans, with 25% of new customers opting for this package.
Netflix justifies this change by pointing out that the starting prices for the Standard With Ads plan, at $6.99 in the U.S. and £4.99 in the U.K., are lower compared to their competitors.
They believe this provides excellent value to customers, considering the extensive and high-quality content available on their platform.
Recently, Netflix also discontinued the Basic plan in Canada. The decision to remove this plan in the U.S. and the U.K. coincides with the release of their Q2 2023 earnings report.
Analysts predict a significant boost from Netflix’s new paid-sharing program, which aims to monetize password sharing and was widely launched in Q2 across various countries.
In Q1 2023, Netflix reported that their ad-supported plan in the U.S. was generating higher overall average revenue per customer (ARPU) than their $15.49/month Standard plan.
This suggests that the company was making at least $8.50/month in ad revenue per subscriber on the Standard With Ads plan.
The Standard With Ads plan allows users to watch content on two devices simultaneously, similar to the no-ads Standard plan.
However, it does not offer offline viewing or the option to add an additional member. Users can expect an average of 4 minutes of unskippable ads per hour on this plan.
Netflix claims that the vast majority of their TV shows and movies are available on their ad-supported plans, but a few may not be due to licensing restrictions.
Netflix’s ad-supported plans are available in several countries, including the U.S., U.K., Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, and Spain.