Key Takeaways
- Netflix is discontinuing its $11.99 per month ad-free plan, forcing subscribers to switch to more expensive plans.
- The Basic plan has already been phased out for new and returning subscribers, leaving only the ad-supported and more expensive plans.
- The move suggests that Netflix wants users to sign up for ad-supported or more expensive plans, potentially to partner with advertisers and monetize live content like WWE.
Netflix plans seem to fluctuate constantly. A new plan is always coming out, or an existing one is being retired. Unfortunately, today's news revolves around the latter. Netflix has revealed to shareholders that the $11.99 per month ad-free plan will no longer be available to subscribers, forcing them to jump to a much more expensive plan if they wish to continue streaming without ads. This comes hot on the heels of the streaming giant announcing a $5 billion deal to be the exclusive home of WWE's Monday Night Raw, so there could be a connection between increased spending and dropping one of its more affordable plans.
In Q4'23, like the quarter before, our ads membership increased by nearly 70% 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.
--Netflix letter to shareholders Jan. 23, 2024. Find past SEC filings on its EDGAR database here.
Expanding on that, the company said that it intends to kill the plan in the UK and Canada in Q2 2024 and continuing from there. Since the plan was already phased out to new subscribers in these markets, we have to assume this means that subscribers who were grandfathered into the existing plan will no longer be able to use it and will be forced to sign up for the cheaper ad-supported plan or, the more expensive ad-free Standard plan.
Netflix just made its ad-supported plan so much better
Those on the ad-supported Netflix plan are in for some exciting new features.The Basic plan has already been phased out for new and returning subscribers, leaving just the ad-supported plan for $6.99, the Standard plan for $15.49, and the Premium plan for $22.99. According to a Netflix US support page, "The Basic plan is no longer available for new or rejoining members. If you are currently on the Basic plan, you can remain on this plan until your plan is changed or your account is canceled."
However, with the company "retiring" the plan, it's likely that members already signed up will have to change once the company rolls out its plan in the United States, though there's no date for that move just yet.
It's clear that Netflix wants users to sign up for its ad-supported or more expensive plans, and this move is pushing the company further in that direction. Based on the 70% increase in ad memberships cited above, it seems that there's a lot of money on the table for Netflix to partner with advertisers, and moving into live content with the WWE deal would make having ads as part of its offering make even more sense, since shows like WWE are typically scripted around ad breaks.
We'll have to see how this affects Netflix's subscription numbers. Although the company has been through price changes in the past and even weathered the account sharing crackdown, a move like this may not make much of a difference in the long run.