Greedy Netflix? ... Eliminates Ad-Free Basic Plan

Canada, USA, and UK Discontinuation Decision
"A Decision for Long-Term Profit Optimization"

Netflix has discontinued its cheapest ad-free basic plan (Basic) in Canada, the United States, and the United Kingdom. However, it continues to offer an ad-supported plan that is cheaper than the Basic membership but requires viewers to watch ads, indicating a strategic decision to boost advertising revenue.

On the 19th (local time), Netflix restricted new sign-ups for the Basic plan, which was offered at $9.99 per month in the US and UK. This follows Canada, making it the second country to do so. This plan was the cheapest option for subscribers to watch content without ads.

Photo by Pixabay

The Basic membership offers 720p resolution and allows only one simultaneous viewer, effectively making it a single-user plan. With the Basic plan discontinued, users must now choose either the $6.99 per month 'Standard with ads' plan, which requires watching ads, or the ad-free 'Standard' plan at $15.49 per month. The 'Premium' plan costs $19.99.

Netflix explained, "The Basic plan is no longer available to new or returning subscribers. However, current Basic plan subscribers can continue using it until they change their plan or cancel."

Greg Peters, Netflix's co-CEO, stated in an interview during the Q2 earnings announcement that the pricing restructure was made to optimize long-term revenue.

Co-CEO Peters said, "The ad-supported plans in these three countries are showing decent subscription rates. We believe this approach will best achieve our goal of long-term revenue optimization, which is why we started restricting Basic membership sign-ups in these countries."

Since an ad-supported plan is also available in South Korea, the discontinuation of the Basic plan may be applied there as well. However, according to the ‘OTT Service Trend Report 2023’ released last month by Data Platform Open Survey, 32% of respondents said they would not want to watch ads regardless of how cheap the subscription fee is.

Netflix has been offering a low-cost ad-supported plan in South Korea since last year. The subscription fee for Netflix’s ad-supported plan is 4,500 KRW per month, about half the price of the previously cheapest Basic plan at 9,500 KRW.

Despite user backlash, Netflix appears to be achieving results with the introduction of the ad-supported plan in South Korea. Academia predicts that Netflix could generate approximately 300 billion KRW annually in advertising revenue from this plan.