Netflix has axed its basic subscription service, the platform’s cheapest commercial-free plan in the United States and UK.
Subscribers in the UK will be forced to pay an extra £4 a month if they want to watch their favorite shows without being interrupted by adverts. Standard and premium plans without ads cost $15.49 and $19.99 respectively, every month. Netflix spokesperson said their ad-based plans in the U.S. and UK are lower than the competition and provide great value to consumers given the breadth and quality of the platform’s catalog.
This is Netflix’s strategy to get more sign-ups for its recently launched ad-supported option. Spencer Neumann, Netflix‘s Chief Financial Officer, had said during last quarter’s earnings calls that the economics of its ad-supported plan were higher than the basic plan. He said it’s actually even higher, adding that advertising was incremental for the platform’s revenue and profit.
Two months ago, Netflix told advertisers it had five million monthly active users for ad tier, and 25 percent of new customers were signing up for the plan, wherever it’s available. UK and U.S. users, under the new pricing system, will have to pay £10.99 to enjoy commercial-free viewing on Netflix’s standard service. Users who already have the Basic ad-free plan will be able to keep it unless they cancel their membership, or change subscriptions.
It should be noted that in November 2022, Netflix launched the $6.99 ad-supported tier, which features an average of up to four to five minutes of ads per hour. Netflix said building an ads business from scratch isn’t easy. “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.”
Also Read: Netflix’s Ad Plan Gains Momentum, Reaches 1mn Monthly US Users: Report
