Netflix Discontinues Cheapest Ad-Free Plan to Promote Ad-Supported Tier
Netflix discontinues basic ad-free plan in the US and UK to focus on ad-supported tier. Streaming giant aims to attract more subscribers with new strategy.
Netflix has made a significant move in its strategy by discontinuing the basic ad-free plan in the U.S. and UK, in an effort to attract more subscribers to its ad-supported tier.
As per the company's website, the $9.99-a-month basic plan will no longer be available for new or returning members. Existing users on this plan can continue to enjoy it until they decide to switch plans or cancel their account.
Last November, in response to intensifying competition for online viewers, Netflix introduced a $7-per-month option with commercials in 12 markets, including the U.S., as an alternative to its ad-free plans. The aim was to not only lure more customers but also diversify revenue streams.
In a recent effort to further boost its ad-supported base, Netflix took measures against password sharing in May. This prompted users who previously shared accounts outside of the same household to opt for the cheaper ad-tier option.
According to Macquarie analysts, Netflix's crackdown on password sharing is expected to act as a catalyst in attracting more users to its $6.99 ad-tier base, leading to increased revenue from advertising.
In May, Netflix announced that its ad-supported tier had already amassed nearly 5 million active users per month, highlighting its broad programming offerings to potential advertisers.
Investors are eagerly awaiting the company's second-quarter results, which will be reported later today. Among the points of interest will be an assessment of the risks posed by the ongoing Hollywood strike.