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Credit: Netflix
Netflix has made changes to its streaming plans in the U.S. and the U.K., discontinuing the Basic plan that offered a single stream without ads for $9.99/month in the U.S. and £6.99/month in the U.K. The move is part of the company's strategy to promote its advertising-supported package, Standard With Ads, which was launched last November. New or rejoining members can no longer sign up for the Basic plan, but existing Basic subscribers can continue on the plan until they choose to change or cancel it.
The decision to end the Basic plan aims to drive more customers to the ad-supported option, which Netflix sees as a promising avenue for growth. The company has already attracted over 5 million members to its ad-supported plans, with 25% of new subscribers opting for this package. Netflix believes its competitive starting prices of $6.99/month in the U.S. and £4.99/month in the U.K. for Standard With Ads offer excellent value to consumers considering the extensive and high-quality content available in its library.
Netflix previously removed the Basic plan from its offerings in Canada, and now it is applying the same approach in the U.S. and the U.K. The timing coincides with Netflix's Q2 2023 earnings report, where analysts expect positive results from its paid-sharing program, an attempt to monetize unauthorized password sharing launched in several countries.
In Q1 2023, Netflix revealed that the ad-supported plan in the U.S. was generating higher average revenue per customer (ARPU) compared to the $15.49/month Standard plan. This suggests that Netflix was earning at least $8.50/month in ad revenue per subscriber on the Standard With Ads plan. The Standard With Ads package allows simultaneous viewing on up to two devices, similar to the ad-free Standard plan, but it does not support offline viewing or the option to add an additional member. The plan includes an average of 4 minutes of unskippable ads per hour.
Netflix assures that the majority of its TV shows and movies are available on ad-supported plans, accounting for around 95% of the platform's total catalog on average worldwide in Q1. However, a few titles are not included due to licensing restrictions. Currently, Netflix's ad-supported plans are accessible in several countries, including the U.S., U.K., Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, and Spain.
