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The Netflix logo displayed on a phone screen and its website on a laptop screen are seen in this photo taken in Krakow, Poland, June 8, 2023.
Jacob Borzycki | Norphoto | Getty Images
Netflix It dumped the cheapest ad-free plan in the US and UK, in an effort to get more sign-ups for its recently launched ad-supported option.
on its plans and pricing page, which defines all subscriber options, Netflix noted that the Basic plan, which costs $9.99 and no ads, is no longer available to new or joining members. Existing plan subscribers will not be affected unless they choose to change plans or cancel.
The move leaves Netflix’s “Standard with Ads” plan, which is priced at $6.99 per month, as its cheapest option.
During last quarter’s earnings call, Netflix CFO Spencer Newman said the “economics” of its ad-supported plan were higher than the basic plan. “It’s actually above our standard plan,” he said during the call, adding that the announcement was an increase in both revenue and earnings.
Reed Hastings, the former co-CEO of Netflix, admitted late last year that he was slow to embrace advertising on the streaming platform because it was so focused on digital competition from tech companies. Soon after, co-CEO Ted Sarandos said during an investor conference that Netflix is ​​likely to offer multiple ad-supported tiers over time.
Standard and outstanding plans Without ads costs $15.49 and $19.99 respectively per month.
Netflix, like other media companies, is looking to increase streaming revenue, and advertising has been seen as a major step toward achieving that.
Likewise, Disney CEO Bob Iger said that the company is leaning towards the ad-supported streaming option to reach profitability.
Netflix launched the advertising category late last year. Like the recent crackdown on password sharing, the plan was introduced after Netflix saw subscriber growth stagnate and looked to other options to increase revenue.
In May, Netflix told advertisers that it had 5 million monthly active users of the ad tier, and that 25% of new customers signed up for the plan where it was available.
Netflix will report earnings after the bell on Wednesday, and investors will be paying close attention to how the new sharing policy and ad-supported plan will affect subscriber additions and revenue.
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