Netflix announced Thursday the discontinuation of its Basic plan for U.S. and French subscribers. This change, effective immediately, will require current Basic tier members to switch plans to continue enjoying Netflix’s streaming services. The Basic plan, which cost $11.99 per month and did not include advertisements, has been officially removed from the platform’s offerings.
“The Basic plan has been discontinued,” read the updated Netflix Help Center pages for both U.S. and French plans and pricing. “You can change your plan at any time.” This move follows earlier steps taken in the U.K. and Canada, where the Basic plan had been phased out for new or rejoining members and subsequently eliminated for all subscribers.
Impact on Subscribers
The removal of the Basic plan signifies a significant shift for many Netflix subscribers who preferred an ad-free viewing experience at a lower cost. Subscribers on the Basic plan in the U.S. and France will now need to choose between the remaining options: the ad-supported “Standard with Ads” tier at $6.99 per month, the $15.99-per-month “Standard” plan, or the $22.99-per-month “Premium” plan, both of which do not include advertisements.
Netflix indicated that the discontinuation of the Basic plan in the U.K. and Canada has positively influenced the growth of its ad-supported tier. The company has seen a 34% sequential increase in its ads member base during the second quarter. Netflix’s efforts to crack down on password sharing have also contributed to this growth.
Financial Performance and Future Outlook
The elimination of the Basic plan was announced in conjunction with Netflix’s second-quarter earnings report. The company revealed that it has over 277 million subscribers worldwide, with more than 84 million in the U.S. and Canada. Netflix projected a 14%-15% growth in revenue for the full year and forecasted an annual operating margin of 26%, both slight increases from previous guidance.
“Our goal is to increase our operating margin each year, though the rate of expansion will vary year to year,” Netflix stated. The company’s strategic shift towards promoting its ad-supported tier and reducing the availability of ad-free, lower-cost plans appears to be part of this broader financial strategy.
Subscriber Adaptation and Market Impact
The discontinuation of the Basic plan is likely to have a varied impact on Netflix subscribers. While some may opt for the cheaper, ad-supported tier, others may choose to upgrade to the more expensive ad-free options. This strategy may drive higher average revenue per user (ARPU) and enhance Netflix’s overall financial performance.
Subscribers have expressed mixed reactions to the change. Some appreciate the lower cost of the ad-supported tier, while others are disappointed by the loss of an affordable, ad-free option. This shift in subscription offerings underscores the ongoing evolution in the streaming industry, where platforms continually adjust their models to balance user experience with revenue growth.
The move to eliminate the Basic plan aligns with broader trends in the streaming industry, where companies are increasingly exploring ad-supported models to diversify revenue streams. As Netflix continues to refine its offerings, the company will need to closely monitor subscriber feedback and market dynamics to ensure sustained growth and customer satisfaction.
