Netflix drops cheapest basic ad-free option in the USA and UK

July 20, 2023

Netflix has gotten rid of its cheapest commercial-free plan in the United States and the United Kingdom in a push to get more sign-ups for its recently launched ad-supported option, reports CNBC

On its plans and pricing page, which outlines all subscriber options, Netflix notes that the basic plan—which costs $9.99 and does not feature ads—will no longer be available to new or rejoining members. Current subscribers of the plan won’t be affected unless they choose to change plans or cancel.

The move leaves Netflix’s standard with-ads plan, which is priced at $6.99 a month, as its cheapest option. The standard and premium plans without ads cost $15.49 and $19.99, respectively, a month.

During last quarter’s earnings call, Netflix Chief Financial Officer Spencer Neumann said the “economics” of its ad-supported plan were higher than the basic plan. “It’s actually even higher than our standard plan,” he said during the call, adding that advertising was incremental to both its revenue and profit.

Former Netflix co-CEO Reed Hastings admitted late last year that he was slow to embracing advertising on the streaming platform because he was so focused on digital competition from tech companies. Shortly after, co-CEO Ted Sarandos said during an investor conference that Netflix was likely to offer multiple ad-supported tiers over time.

Netflix, similar to other media companies, has been looking boost streaming profits, and advertising has been considered a key step toward making that happen.

Similarly, Disney CEO Bob Iger has said the company is leaning into its ad-supported streaming option to get to profitability.

Netflix launched the ad tier late last year. Similar to its recent crackdown on password sharing, the plan was introduced after Netflix saw subscriber growth stagnate and looked to other options to boost revenue.

In May, Netflix told advertisers that it had five million monthly active users for the ad tier, and 25% of new customers were signing up for the plan where it’s available.

Research contact: @CNBCnow