The streaming giant’s decision to eliminate its ‘Basic’ ad-free service plan in the US and UK suggests the company is trying to squeeze more dollars out of each household – and bolster its ad business. It’s a plan that many experts believe will succeed.
Netflix Wednesday announced that it’s axing its ad-free ‘Basic’ subscription tier in the US and UK markets. The decision comes amid a flurry of changes made by the streaming titan in the last year – including rolling out ad-supported tiers, upping pricing on plans, and cracking down on password-sharing – to drive growth beyond signups.
The change could significantly impact Netflix’s advertising business – and, ultimately, bolster its market share.
The ‘Basic’ plan, also removed in Canada last month, gave users access to ad-free Netflix on one screen at 720p quality and came at a monthly cost of $9.99 in the US and £6.99 in the UK. The company clarified on its website that existing users on the plan can keep the deal, but newcomers won’t be given the ‘Basic’ plan option.
This means that all new subscribers in the US and UK markets will be forced to either select an ad-supported plan with fewer available programs or one of two more expensive ad-free options with up to four supported devices.
Experts say the decision to funnel users to one of these options reflects broader marketplace changes. For one, viewership habits suggest consumers are increasingly open to adopting cheaper, ad-supported streaming plans, says Darrick Li, vice-president of sales for North American media owners at media planning and buying platform Guideline. This trend is multifold, but economic uncertainty could be a key driver.
“While consumers today continue to nix subscriptions to mitigate platform fatigue and economic pressures, they are now also leveraging ad-supported offerings to watch popular shows without stretching funds,” Li says. “This is direct evidence that consumers have…