Netflix has gotten rid of its cheapest commercial-free plan in the U.S. and the U.K., in a push to get more sign-ups for its recently launched ad-supported option.
On its plans and pricing page, which outlines all subscriber options, Netflix noted that the basic plan, which cost $9.99 and didn’t feature ads, was no longer available for 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.
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.
The standard and premium plans without ads cost $15.49 and $19.99, respectively, a month.
Netflix, similar to other media companies, has been looking to 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 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.
Netflix will report earnings after the bell Wednesday, and investors will be paying close attention to how the new sharing policy and ad-supported plan have affected subscriber additions and revenue.
Source : CNBC
