- Netflix announced on Wednesday that it is withdrawing a subscription from its platform
- The plan will be removed from select locations this spring, with more to follow
- READ MORE: Netflix adds 13 million new subscribers
Netflix is phasing out a streaming plan later this year in an effort to lure subscribers to other tiers.
The $11.99 per month basic ad-free plan will be discontinued in the spring, forcing customers to pay more for the other ad-free plans: $15.49 for the standard option or $22.99 for premium. They also have the choice to downgrade to the $6.99 ad-supported plan.
The streaming giant will start in Canada and the United Kingdom, “and go from there,” according to Netflix’s fourth-quarter shareholder letter.
Despite vowing for years never to advertise, advertising has become an important source of revenue for the company. Advertising plans account for 40 percent of new Netflix signups.
The $11.99 per month ad-free Basic plan will start disappearing in the spring, forcing customers to pay $15.49 for the Standard option, $22.99 for Premium or downgrade to the $6 ad-supported plan .99
‘In the fourth quarter of 2023, our advertising membership increased by almost 70 percent quarter-on-quarter, similar to the previous quarter, supported by improvements in our offering (e.g. downloads) and the phase-out of our basic subscription for new and returning members in our advertising markets ‘, the letter states.
Co-CEO Greg Peters said in a video interview for investors that Netflix is increasing its marketing efforts by making advertising plans more attractive, involving partner channels and shifting pricing structures “where we see fit.”
Peters further explained that the ad-supported tiers are designed to provide better overall value for members than the Basic plan.
The announcement that the basic subscription would be abolished was accompanied by the news that Netflix has added 13 million new subscribers by the end of 2023. That brings Netflix’s total subscribers to more than 260 million, firmly entrenching Netflix as the most popular streaming service in the world.
With the advertising plan, customers get a better subscription than Basic, more streams and a higher resolution for downloads. And of course the real benefit is that they get access to all these great stories at a lower effective price.”
They’re also improving targeting, launching more ad programs and ad partnerships, which is likely why Netflix is pushing for its cheaper $6.99 tier.
Netflix still has “years of work ahead of it” before its advertising business becomes a viable source of revenue, Peters admitted.
“Our top advertising priority… is scale,” he said.
The announcement that the Basic subscription was being abolished was accompanied by the news that Netflix had added 13 million new subscribers by the end of 2023.
That brings Netflix’s total number of subscribers to more than 260 million, making Netflix the most popular streaming service in the world.