In a surprising and unannounced move, Netflix, the popular streaming giant, has decided to discontinue its $9.99 Basic subscription tier for new and returning subscribers in the U.S. and U.K. This change, which was implemented without a formal announcement, leaves viewers with two remaining options: either pay an additional $5.50 per month for the Standard plan or opt for the “Standard with ads” plan, which includes regular ad interruptions.
The changes were quietly updated on Netflix’s help center page. The company noted that the Basic plan “is no longer available for new or rejoining members. If you are currently on the Basic plan, you can remain on this plan until you change plans or cancel your account.” This move mirrors a similar strategy implemented in Canada last month, again without any official announcement. The lack of communication about these changes could potentially lead to unpleasant surprises for subscribers who leave Netflix and later decide to return, expecting to sign up for the $10 ad-free option.
This shift in subscription plans appears to be a strategic move by Netflix to drive more subscribers toward its ad-based option. By doing so, the company can increase the number of ad views, thereby making the platform more attractive to potential advertisers. This is a significant change in Netflix’s business model, which traditionally focused on ad-free viewing experiences. Recent data indicates that the number of “With Ads” subscribers has been on the rise since the tier was introduced late last year.
However, Netflix is facing stiff competition from other streaming services that offer ad-supported tiers. According to data from analytics firm Antenna, Netflix has seen the smallest growth in new ad-supported subscribers in the U.S. compared to other major streaming services since the start of 2023. This suggests that while Netflix is trying to increase its ad-based viewership, other platforms may be more successful in attracting these viewers.
Despite this, Netflix CEO Greg Peters stated at the company’s latest Upfront presentation that a quarter of all new sign-ups worldwide are opting for the “With Ads” plan. This is a significant shift for a company that once completely avoided traditional cable-style advertising. The company, under former co-CEO Reed Hastings, once eschewed traditional cable-style advertising completely. However, Netflix has recently been courting ad leaders with promises of “episodic” ad campaigns and new forms of targeted advertising.
In addition to these changes, Netflix is also taking steps to end password sharing in the U.S. and other major markets. The company is promoting the ability for users to transfer profiles from an old account to a new one. However, adding extra users to an account will now cost an additional $7.99 per month. This move is likely to impact families and groups of friends who have been sharing a single account to save on subscription costs.
This news comes as other streaming services, such as NBC’s Peacock, are also raising their prices. Peacock recently increased its monthly streaming subscription prices by $1 or $2, while annual plans went up by $10 and $20 for the Premium and Premium Plus plans, respectively. Netflix itself increased its prices in January of last year, marking the second price hike in just two years.
For 2023, Netflix seems to be finding new ways to increase prices indirectly, not by raising costs outright, but by limiting the options users have to watch ad-free content at home or through shared accounts. This could be seen as a strategic move to increase revenue while maintaining a competitive edge in the increasingly crowded streaming market. However, it remains to be seen how these changes will be received by Netflix’s user base and whether they will impact the company’s subscriber growth in the long term.