Netflix, the streaming giant headquartered in Los Gatos, California, announced plans to discontinue its lowest-priced ad-free subscription option in the U.S. and France. This decision, detailed in a shareholder letter on Thursday, marks a strategic move to potentially bolster subscriptions to its cheaper ad-supported plan.
The phased-out basic ad-free plan, previously priced at $11.99 per month, has already been removed as an option for new subscribers since July 2023. However, existing subscribers on this plan can continue unless they opt to cancel or switch to other offerings. Netflix had earlier ceased offering the basic plan in the U.K. and Canada, aligning its international strategy.
Currently, Netflix’s subscription options for U.S. customers prominently feature a $6.99 monthly plan with ads, a $15.49 standard HD plan without ads, and a premium Ultra HD plan priced at $22.99, also without ads.
The introduction of the “standard with ads” tier in November 2022 has proven successful, driving a notable 34% increase in ad-supported subscriptions from the previous quarter. Netflix reported a robust total of 277.65 million subscribers across all tiers in the second quarter of the year, marking a 16.5% year-over-year increase.
The shift underscores Netflix’s evolving approach to subscription models, emphasizing the attractiveness and growing appeal of ad-supported content among viewers. As the streaming landscape continues to evolve, Netflix aims to adapt its offerings to cater to diverse consumer preferences and market demands.