Netflix Is Doing Great, So It’s Killing Off Its Cheapest Ad-Free Plan for Good

Netflix Is Doing Great, So It’s Killing Off Its Cheapest Ad-Free Plan for Good

This year, at least some countries will have to say goodbye to the Netflix Basic subscription tier, the last cheap(ish) way to watch Netflix without ads. While the streaming giant had already severed the $US12 Basic subscription tier for new or returning subscribers, anybody who chose to keep paying their monthly tithe to keep that lower price point will find themselves forced to pay more, or else go with the cheaper ad-based tier.

Canada and the U.K. will be the first to see their Basic plan go away in the second quarter of this year. More markets will likely see their $US12-a-month subscription die in the months afterward, Netflix execs speaking to investors in the company’s latest earnings report indicated on Tuesday. While the Basic plan went up in price by $US2 late last year, the next cheapest option for all those with lingering Basic subscriptions would be the $US7 Netflix with ads plan or the $US15.49 Standard tier. There’s also the $US23-a-month Premium tier that supports more simultaneous devices and Ultra HD resolution.

This move is explicitly tied to the company’s ad business. Netflix reported major ad-based revenue gains over the last few months with ads membership increasing 70 per cent quarter over quarter. Netflix co-CEO Greg Peters told investors in a video call that one of their main goals going forward is improving ad targeting and adding more “binge ads” (ads that reward viewers with ad-free episodes for the content they’re watching), sponsorships, and serving advertisers’ needs.

“The ads plan now accounts for 40 per cent of all Netflix sign-ups in our ads markets and we’re looking to retire our Basic plan in some of our ads countries, starting with Canada and the UK in Q2 and taking it from there,” executives told investors Tuesday. The company also didn’t rule out future price hikes, mentioning “we’ll occasionally ask our members to pay a little extra” for improvements to the streaming service.

The company’s ad-based tier now sits at 23 million monthly active users, according to Peters. Overall, Netflix claims it added 13.1 million subscribers in the last quarter of 2023 up to around 260 million, a big growth bump attributed to films like Rebel Moon: A Child of Fire and Adam Sandler’s Leo. That’s good news for the company that pivoted hard toward ads after its poor early 2022 tidings.

Netflix has routinely rolled out price increases over the last few years, but that doesn’t mean it’s experiencing subscription losses. Far from it, Netflix seems to be surviving far better in today’s competitive streaming environment. Data from analysis firm Antenna, as displayed by Business Insider, shows that Netflix’s churn—the ratio of people who cancel subscriptions versus new or returning subscribers—is far lower at Netflix compared to other services. Over 2023, Netflix never saw churn above 2 per cent. Warner Bros. Discovery’s Max, on the other hand, experienced a high of nearly 9 per cent churn in October of last year.

Part of that maintained subscriber base may be due to the company’s gaming arm, Netflix’s still relatively unknown feature that lets subscribers access a whole slew of games for free so long as they have a Netflix subscription. That includes such titles as the remaster Grand Theft Auto trilogy, which are admittedly the best way you can get the games in a modern format after the whole Definitive Edition fiasco.

The GTA re-releases were the streaming company’s “most successful launch to date,” Netflix said in its report, adding that some signed up for Netflix just to access Rockstar’s original GTA trilogy. There are a whole lot of Netflix games that are well worth playing, including titles like Dead Cells and the two Oxenfree adventure titles. Eventually, subscribers may even be able to play these games on TVs. Netflix wants to offer even more value with games and live sports, and part of that includes a newly-inked deal with WWE.

And yet, this latest stealth price increase isn’t so much a hard pill to swallow, as much of a chunk of rock that’s getting lodged in my craw. I was one of those who decided to keep up their subscription to maintain their price point, and I could not be more annoyed. I will probably keep my Basic subscription going for as long as I can because I still keep finding shows on the service worth watching like the excellent Blue Eye Samurai. But when my parents are no longer allowed to watch my streams, and with all these price hikes, even their expanding game library might not keep me around much longer.

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