Netflix will terminate its lowest-priced "Basic" subscription without ads in Canada and the United Kingdom. The streaming giant's most recent earnings release for Q4 2023 revealed that its ad-supported plan accounted for 40% of all Netflix sign-ups in ad-rich areas. The business plans to remove its Basic plan in various regions to boost income and maybe phase it out entirely by Q2 2024.
Netflix is no longer planning to raise prices
The Netflix Basic package originally cost $10 or £7, but the corporation raised the price to $12 or £8 in October. It has also made the Basic plan unavailable to new members beginning in late July. However, the company is no longer planning to raise prices; instead, it is discontinuing its plan for all new and existing subscribers, leaving them with only the option of choosing between a more expensive ad-free plan (starting at $16.49 or £11 per month) or a cheaper plan with ads ($6 or £5 per month).
"In Q4'23, like the quarter before, our ads membership increased by nearly 70 percent quarter over quarter, supported by improvements in our offering (e.g., downloads) and the phasing out of our Basic plan for new and rejoining members in our ads markets," according to a letter from Netflix to its shareholders.
In a recent investor interview, Netflix Co-CEO Greg Peters stated that the company's major goal for its ad-supported plan is to "scale" it up, with 23 million monthly active customers. He stated that this included making it more enticing by making changes to the lowest-priced plan last year, such as increasing the resolution to 1080p, enabling multiple streams, and allowing downloads, as well as modifying Netflix's plans and pricing in other locations.
Netflix's investor statement outlines three revenue-boosting measures. The three strategies are:
Pricing: Netflix indicates that it intends to offer various price options to meet the demands of diverse customers, focusing on maintaining competitive starting prices. As the company develops and expands its services, it periodically modifies its prices to reflect these improvements.
Ads: Netflix sees the integration of advertisements into its business model as a significant source of additional revenue in the medium to long term. As a result, it plans to phase down the Basic plan in select countries, beginning with Canada and the United Kingdom in the second quarter of 2024.
Account Sharing: Netflix has also implemented a plan to monetize sharing. With the restriction, the firm claims to have successfully addressed account-sharing difficulties by offering services such as Transfer Profile and Extra Member.