Netflix has scrapped the entry-level £6.99/$9.99 basic ad-free subscription plan in the UK and the US for new or rejoining members as the streaming giant continues to retrofit ads on to its platform.
After dropping its cheapest ad-free plan in Canada last month, the company has done the same in the UK and the US, it reported during its second-quarter financial earnings today.
This will not affect current subscribers to the basic plan, but it is no longer possible to downgrade to a cheaper ad-free plan. Netflix now only offers a $6.99/(£4.99) monthly ad-supported tier, or a $15.49/£10.99) monthly standard plan (as well as a $19.99 /(£15.99) monthly premium plan.
Netflix said: “In Q1, we lowered prices in a number of less penetrated markets, and in Q2, we phased out our Basic ads-free plan for new and rejoining members in Canada (existing members on the Basic ads-free plan are unaffected). We’re now doing the same in the US and the UK. We believe our entry prices in these countries – $6.99 in the US, £4.99 in the UK and $5.99 in Canada – provide great value to consumers given the breadth and quality of our catalog.”
The company grew revenue by 2.2% year-on-year for the second quarter of 2023 to $8.2bn with a net income (profit) of $1.49bn. It reported 238.4 million paid streaming membership for the quarter, up 8% year on year.
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The company added it is “working hard” to scale its advertising business, eight months after launching a Basic With Adverts subscription tier.
“Our key focus is improving the ads experience for both members and advertisers,” the company said in its earnings report. “In addition to now offering 95% content parity globally (by viewing), more streams plus improved video quality on our ads plan, we’re partnering with Nielsen and EDO to improve measurement and innovating for advertisers. Brands can also now target media buys on our Top 10, which is updated daily and enables them to connect with audiences during our biggest viewing moments.
“While we continue to grow our reach—ads plan membership has nearly doubled since Q1— it’s still off a small membership base, so current ad revenue isn’t material for Netflix. Building an ads business from scratch isn’t easy and we have lots of hard work ahead, but we’re confident that over time we can develop advertising into a multi-billion dollar incremental revenue stream.”
That figure could be as small as just 1.5 million people in the US, according to a report from The Information, citing “industry executives”. Netflix reported 74.4 million paid streaming subscribers across the United States and Canada in the first quarter of 2023.
