Netflix’s Cheapest Ad-Free Plan Is Disappearing As Streaming Revenue Skyrockets
In a shareholder memo, the company remarked that it had achieved its key financial objectives it set at the start of 2023. Those included exiting the year with 12% revenue growth, growing its FY23 operating margin to 21% from 18% in 2022, and increased free cash flow to $6.9 billion for 2023. However, it seems the streaming titan is not satisfied with those numbers, as it will be taking away its cheapest ad-free tier for existing customers later this year.
Netflix had already removed the option of its Basic subscription tier to new and returning customers late last year. However, those who had already opted in on the $12 per month tier were able to keep it. Once Netflix does away with the $12 option for good, the closest options money wise will be a $7 per month tier with ads, or the Standard ad-free tier of $15.49 (as long as those prices don’t go up beforehand). Those who want all the goodies can opt for the $23 per month Premium tier with more device support simultaneously and Ultra HD resolution.
“The ads plan now accounts for 40% of all Netflix sign-ups in our ads markets and we’re looking to retire our Basic plan in some of our ads countries, starting with Canada and the UK in Q2 and taking it from there,” Netflix executives remarked to investors earlier this week. The executives also alluded to raising prices yet again in the future, remarking “we’ll occasionally ask our members to pay a little extra” for improvements to the service.
All of this goes hand-in-hand with the company’s crackdown on password sharing last year. Netflix added a new tier for $7.99 as an add-on option for users to be able to legally share their account with someone who lives outside the home.
One thing seems clear, Netflix is not content with its current market share. In its memo to shareholders, it remarked, “If we continue to execute well and drive continuous improvement — with a better slate, easier discovery and more fandom — while establishing ourselves in new areas like advertising and games, we believe we have a lot more room to grow. It’s a $600B+ opportunity revenue market across pay TV, film, games and branded advertising — and today Netflix accounts for only roughly 5% of that addressable market.”
For those of you who are still enjoying the $12 ad-free tier, enjoy it while it lasts.
