In a bold move indicative of changing times, the popular streaming giant, Netflix, is discontinuing its most economical ad-free subscription packages in the US and UK. Known as the “Basic” package, this decision comes in the wake of similar actions in Canada just last month. Additionally, it trails several months behind Netflix’s introduction of a more budget-friendly, ad-supported option for subscribers.
The impact of this strategic decision is due to be revealed today, as Netflix announces its Q2 2023 earnings. Speculations suggest a significant increase in the uptake of their newly introduced Standard with Ads package, offering a cost-effective entry point for subscribers.
A Netflix spokesperson, while speaking to Variety, stated:
“Our starting prices of $6.99 in the US and £4.99 in the U.K. [for Standard With Ads] are lower than the competition and provide great value to consumers given the breadth and quality of our catalog.“
The phased-out Basic plan, which cost $9.99 in the US and £6.99 in the UK, offered a single stream to subscribers. However, earlier this year, several complaints emerged when certain Netflix content remained inaccessible for the ad-supported subscribers. The streaming platform clarified that this situation stemmed from “licensing restrictions” rather than a calculated ploy to coerce users into pricier subscriptions.
Now, the elimination of the least expensive ad-free plan appears to present subscribers with a straightforward choice: endure ads or pay a premium for an ad-free viewing experience. Subscribers currently using the plan will maintain their status until they voluntarily cancel or alter their subscriptions.
Netflix’s Battle to Keep Subscribers Engaged
Around this time in the previous year, Netflix disclosed a disconcerting dip in their subscription numbers, losing over a million subscribers in a three-month span. In contrast, the Standard with Ads plan’s inception in November led to a resurgence of subscribers, attracting an impressive 5 million sign-ups by May.
Further changes were unveiled at the year’s onset when Netflix declared plans to deter password sharing among subscribers. Co-CEO Greg Peters acknowledged the potential backlash and subscription cancellations, yet defended the policy as a necessary move.
But password sharing was not the only obstacle Netflix had to face in the last year. The platform has come under considerable criticism for frequently discontinuing new shows after merely one or two seasons. Shows such as Warrior Nun, The Dark Crystal: The Age of Resistance, and 1899 were axed, much to the dismay of fans. The cancellation of Warrior Nun sparked an online campaign pleading Netflix to “save” the show. Although the campaign failed to sway Netflix, it appears the series will make a comeback on a different platform.
A Streaming Landscape Undergoing Rapid Change
Netflix’s adjustments are indicative of broader changes in the streaming industry, as platforms scrutinize the balance between spending and profit, especially after the immense growth during the Covid lockdowns. As life gradually returns to some semblance of normalcy, viewers are becoming more selective about which streaming services they patronize and for how long they maintain their subscriptions.
In summary, Netflix’s decision to eliminate its most economical ad-free plans in the US and UK reflects the changing landscape of streaming services. As streaming platforms continue to adjust their strategies to maximize profitability and customer satisfaction, subscribers will need to choose between lower-cost ad-supported plans or more expensive ad-free options. It’s a brave new world in the realm of streaming services, and only time will tell how these strategic shifts impact subscriber growth and retention.
