Ad-Free Farewell: Netflix Plans to Discontinue Its Cheapest Tier

In a strategic move, Netflix has decided to phase out its basic ad-free cheapest tier, signalling a shift in its approach to revenue generation. Netflix will eliminate the basic ad-free plan, which currently costs $11.99 USD. It reflects the Netflix transitions into the realm of ad-supported streaming, marking a significant departure from its reliance on subscription revenue.

The streaming giant aims to encourage subscribers to either embrace ad-supported content or opt for higher-priced subscription plans. This change will streamline Netflix’s pricing structure from four to three tiers:

1. Ads – $6.99 / £4.99 / 5.99€
2. Standard (HD) – $15.49 / £10.99 / 13.49€
3. Premium (4K) – $22.99 / £17.99 / 19.99€

While these prices are reflective of the current landscape. It’s worth noting that Netflix has a history of periodic price adjustments. Moreover, the subscribers should be prepared for potential future changes.

Ad-Free Farewell: Netflix Plans to Discontinue Its Cheapest Tier

This strategic shift is fueled by Netflix’s recognition of the burgeoning potential in the ad-supported streaming market. The company sees scaling its ads business as a lucrative opportunity to tap into new revenue and profit streams over the medium to longer term. In the fourth quarter of 2023, Netflix reported a staggering 70% quarter-over-quarter increase in its ads membership. This growth will help to the enhancements in offerings, such as the introduction of downloads, and the deliberate phasing out of the Basic plan for new and rejoining members in ad-supported markets.

Currently, the ads plan commands a notable share, constituting 40% of all Netflix sign-ups in markets with ad-supported streaming. The decision to retire the Basic plan will initially impact Canada and the UK in the second quarter of this year, with further adjustments expected to follow.

The letter to shareholders emphasizes the ongoing efforts to enhance advertiser experiences by improving targeting and measurement capabilities. As Netflix continues to evolve its business model, these changes underscore the company’s commitment to adapt to market dynamics and explore avenues for sustained growth.

While these modifications may raise questions among existing subscribers, Netflix is positioning itself to capitalize on the evolving landscape of streaming services, aiming to strike a balance between subscriber preferences, ad-supported models, and revenue diversification.

See Also: Netflix’s ‘What We Watched’ Report: Viewer Trends Unveiled