Netflix Ditches Basic Plans, Promotes Ad-Supported Option
In a recent move, Netflix has bid farewell to its most economical streaming plan, Basic, which offered an ad-free experience. The discontinuation of this plan is affecting both the United States and the United Kingdom. Instead, the streaming giant is encouraging users to opt for its ad-supported package called “Standard With Ads,” which has been steadily gaining popularity since its introduction in November of last year.
Formerly priced at $9.99 per month in the U.S. and £6.99 per month in the U.K., the Basic plan allowed for a single stream. However, Netflix has decided to no longer offer this plan to new or returning customers in either country. Those who are already subscribed to the Basic plan can continue using it until they decide to make changes or cancel their subscription.
Netflix's motivation behind phasing out the Basic plan is to bolster the adoption of its ad-supported Standard With Ads plan. Remarkably, since its launch, this plan has attracted more than 5 million subscribers. Surprisingly, a quarter of these new subscribers have opted for the ad-supported option.
A spokesperson from Netflix highlighted the affordability and content diversity provided by the ad-supported plan, stating, “Our starting prices of $6.99 in the US and £4.99 in the U.K. [for Standard With Ads] are lower than the competition and provide great value to consumers given the breadth and quality of our catalog.”
This strategic shift comes on the heels of a similar discontinuation of the Basic plan in Canada. As Netflix prepares to unveil its Q2 2023 earnings, industry experts are predicting a significant boost resulting from the company's newly introduced paid-sharing initiative. This program is aimed at generating revenue from unauthorized password sharing.
During the Q1 2023 earnings report, Netflix revealed that the ad-supported plan was already generating a higher average revenue per customer (ARPU) compared to the $15.49 per month Standard plan. This suggests that Netflix is earning at least $8.50 per month in advertising revenue per subscriber on the Standard With Ads plan.
While the Standard With Ads plan allows simultaneous streaming on up to two devices, similar to its ad-free counterpart, it does not include offline viewing or the option to add an extra member to the account. Viewers can anticipate an average of four minutes of non-skippable advertisements per hour of streaming.
Netflix assures its customers that the majority of its vast library of TV shows and movies are accessible on the ad-supported plans. However, a few titles may be excluded due to licensing restrictions. Presently, the ad-supported plans are available in various countries, including the U.S., U.K., Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, and Spain, where it was widely introduced during Q2 2023.
This shift underscores Netflix's attempt to cater to different segments of its user base, offering more options for viewers who are budget-conscious or who don't mind watching ads in exchange for a lower subscription cost. As the streaming landscape continues to evolve, Netflix is clearly adapting its strategies to maintain its competitive edge.
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