Netflix is Axing its Cheapest, Ad-Free Plan in the US
Netflix has announced that it will begin phasing out its Basic plan, the cheapest ad-free subscription option, in the United States. Priced at $11.99 per month, the Basic plan will no longer be available for new sign-ups, as the company encourages users to switch to its ad-supported plan at $6.99 per month. Existing Basic plan subscribers can continue with their current plan for now.
Earlier this year, Netflix retired the Basic plan in Canada and the UK, and the US and France are now set to follow. In the US, ad-free viewing will be limited to the Standard plan at $15.49 per month and the Premium plan at $22.99 per month.
Netflix’s push towards ad-supported subscriptions has shown positive results, with a 34% increase in sign-ups for its “Standard with ads” tier in the second quarter of 2024. The platform reported a record 277.65 million subscribers, far surpassing competitors like Disney+, Peacock, and Max. This growth included 8.05 million new subscribers in the last quarter, partly driven by efforts to curb password sharing.
Despite the recent surge in subscribers, Netflix anticipates a slower growth rate in the third quarter. The company’s stock dropped nearly 2% in after-hours trading but has risen more than 35% in 2024.
In a strategic shift, Netflix will stop reporting quarterly subscriber numbers starting in 2025, opting instead to disclose the time spent on the platform. The company has also ventured into live sports programming, announcing a three-year deal to broadcast NFL Christmas Day games and a 10-year agreement to air WWE Raw live.
Netflix’s co-CEO, Ted Sarandos, highlighted the appeal of live sports for both subscribers and advertisers, stating, “We’re in live because our members love it. It drives a ton of engagement and excitement, which are valuable to advertisers.”
In addition to live sports, Netflix plans to open two large entertainment venues, called Netflix Houses, in Dallas and near Philadelphia by 2025. These complexes will feature events, themed shops, and restaurants, aiming to enhance brand loyalty and retain subscribers.
Analyst David Joyce from Seaport commented, “These complexes are designed to drive brand loyalty and keep customers in the Netflix ecosystem longer.”
This evolution of Netflix reflects its efforts to diversify its offerings and adapt to the changing media landscape, positioning itself as a versatile and sustainable entertainment platform.
