Last July, we learned that Netflix planned to remove its cheapest ad-free plan to steer customers to either the more affordable ad-base Standard plans or one of the more expensive ad-free options still available (Standard and Premium). Some six months later, Netflix is again announcing the doom of the cheapest ad-free plan. But this time around, the Basic plan is going away for good, even if you’re still a paying customer.
It’s not happening right now, according to Netflix. The change will impact Canada and the UK first, with the Basic subscription being retired at some point in the coming quarter. I expect Netflix to nudge customers who are still paying a Basic ad-free subscription to move to the available alternatives.
Unlike last July, you won’t be able to do anything about the change. Well, other than to cancel Netflix, if that’s the course of action you’ll want to take.
When Netflix removed the Basic subscription last summer, you were left with these three options, with one big twist:
- $6.99 Standard with ads
- $15.49 Standard
- $22.99 Premium
The twist was that you could still hold onto your Basic subscription ($11.99) as long as you were paying for it. New Netflix subscribers could not get it, however. Neither could existing customers who were on one of the other plans.
Basic plan will be retired
Fast-forward to mid-January 2024, and Netflix announced the retirement of the Basic tier during its recent quarterly earnings report. It starts next quarter and won’t impact Netflix’s global operations. This still gives you a few months of Basic access before you’ll have to make changes to your subscription.
Here’s the relevant quote from Netflix’s quarterly earnings letter to shareholders that reflects the upcoming change:
In Q4’23, like the quarter before, our ads membership increased by nearly 70% quarter over quarter, supported by improvements in our offering (e.g., downloads) and the phasing out of our Basic plan for new and rejoining members in our ads markets. The ads plan now accounts for 40% of all Netflix sign-ups in our ads markets and we’re looking to retire our Basic plan in some of our ads countries, starting with Canada and the UK in Q2 and taking it from there.
The timeline isn’t clear. But Netflix will eventually remove the Basic tier from all its markets.
Why, Netflix, why?
Netflix wants more money, and it’s not about to increase the price of the other subscriptions. Not yet, at least. Removing the Basic tier forces subscribers to pay $3.50 more per month for the next best ad-free experience or get on the $6.99 ad-based tier. As the quote above implies, the latter is a top priority for Netflix.
Netflix has no problem with you paying a cheaper subscription as long as it can get you to watch ads. Netflix co-CEO Greg Peters said in the interview that Netflix has 23 monthly active users that are on the ad-supported plan. That’s out of the 260 million global subscribers, including the new 13.1 million subscribers Netflix added during Q4 2023.
Peters added that Netflix’s priority for the ad tier is scale. The exec said Netflix is making the $6.99 ad-supported tier more attractive. The plan got Full HD support, multiple streams, and downloads for mobile devices last month. It’s effectively on par with the $15.49 ad-free Standard plan when it comes to features.
Retiring the Basic subscription might help Netflix move the needle further and convince more subscribers to watch ads.
