Netflix will gradually phase out its most affordable ad-free option, the company announced Thursday.
The streaming giant stopped accepting new customers for its Basic plan, which costs $11.99 per month, in October last year.
Existing subscribers of the Basic Subscription could keep their current subscription.
But Netflix has now announced that it will be eliminating the option entirely. Existing customers, tens of millions, will have to switch to another subscription.
Basic plan users looking for an ad-free Netflix experience now have two options: the Standard plan for $15.49 per month or the Premium plan with 4K for $22.99 per month.
Customers can also switch to the ad-supported subscription, which costs $6.99 per month.
Netflix is discontinuing its Basic plan for existing customers. The streaming giant had already stopped accepting new customers for the $11.99-per-month plan in October of last year.
Netflix announced the same measure for Canada and the United Kingdom in January. Customers are increasingly reporting that they are being approached to transfer their subscriptions.
If Netflix keeps to this schedule for the US, US customers will start receiving alerts later this year or early next year.
Customers have been reacting to the discontinuation of the Basic subscription on social media.
On Reddit, one user wrote: ‘They’re taking away the subscription that most people have had for years and forcing them to get a higher subscription.
“That’s a great plan to force people back to the open sea!”
Meanwhile, Netflix reported later on Thursday that it added more than 8 million subscribers in the second quarter — from April through June.
The streaming service benefited from a stricter approach to password sharing with titles like ‘Bridgerton,’ ‘Baby Reindeer’ and ‘The Roast of Tom Brady.’
While the subscriber count exceeded analysts’ forecasts of 5 million, Netflix also warned that subscriber growth in the third quarter would be slower than the comparable period in 2023, when the password sharing crackdown was just beginning.
Netflix also announced that Peter Naylor, vice president of advertising sales, is leaving the company.
In a letter to investors, the company said it does not expect advertising to be the primary driver of revenue growth before 2026.
Netflix shares fell 2 percent in after-hours trading to $630.06.
At the end of June, the total number of Netflix subscribers worldwide exceeded 277 million.
The streaming video pioneer is struggling with saturation in the United States and told Wall Street last quarter that it will no longer regularly report on the number of new subscribers next year.
Investors are keeping a close eye on growth in Netflix’s ad-supported subscription business, which has been fueled by the company’s stricter rules on password sharing, higher prices for ad-free plans and new bundles for consumers, such as Comcast’s “StreamSaver” bundle, which combines Netflix with Peacock and Apple TV+.
Netflix reported that its ad market subscriber base increased 34 percent from the previous quarter, but the company did not say how many subscribers opted in to the option.
“Our advertising business is growing nicely and is becoming an increasingly meaningful contributor to our business,” Netflix said in its letter to investors. “But building a business from scratch takes time — and combined with the large size of our subscription revenue — we do not expect advertising to be a primary driver of our revenue growth in 2024 or 2025.”
The company expects third-quarter revenue to grow 14% from a year ago.
NETFLIX PRICE RISES OVER TIME
Our interactive chart below shows how prices have changed and when new plans were introduced.
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After its launch in 2011, Netflix kept prices largely the same.
But since 2016, Netflix has been steadily raising the prices of its various services, usually every two years.
For example, in October 2017, subscribers with a standard and premium subscription discovered that they had to pay an additional $1 per month.
May 2019 marked the first time the streamer raised the price of its cheapest subscription option. Netflix basic subscribers had to pay $1 more per month — from $7.99 to $8.99. The standard and premium plans went up $2 — to $12.99 and $15.99, respectively.
In October 2023, not only was the $9.99 base subscription eliminated, but the ad-free premium subscription was also increased. This allows users to add two additional members from different households – from $19.99 to $22.99 per month.