The Big Picture
- The Basic subscription plan will soon be discontinued for all Netflix subscribers, forcing existing customers to choose between a cheaper ad-supported option or a more expensive standard plan.
- Netflix has been successful in pushing customers towards the ad-supported option, with 40% of new sign-ups attributed to the Basic with Ads tier.
- Netflix is making moves to stay ahead of streaming rivals, including signing a 10-year, $5 billion deal with WWE to air live sports events, but this may result in additional costs for consumers.
The Basic subscription plan will soon meet its end for all subscribers at Netflix. Once the cheapest ad-free plan, the streamer phased the tier out last summer for new subscribers to push more newcomers to their ad-supported option. Starting this spring in the UK and Canada, however, existing customers who remained on the plan after its removal will be forced to pick between the $6.99 Basic with Ads option or the increased $15.49 Standard offering. The rollout will happen gradually with territories slowly losing access to the plan in the weeks and months after it begins.
News of the move came in yesterday’s shareholder letter from Ted Sarandos and company, which highlighted the growth Netflix has achieved thanks to its recent changes. Killing the Basic plan was likely always in the cards after its removal to continue raking in profits for the streamer with its ad-free plan. Netflix even implemented a massive price hike last year from $9.99 to $11.99 in an effort to get more out of the stragglers remaining on the Basic tier, but it’s clear the company always wanted to create a more streamlined (and expensive) two-tier system with the option for a far more expensive $22.99 Premium plan also available.
So far, everything is working like a charm for Netflix. Cracking down on password sharing caused a surge in the number of sign-ups and, with the ad-free plan launching not long before, many of those initially utilizing others’ plans were drawn to the cheaper option. 40% of all new sign-ups to Netflix can be attributed to the Basic with Ads tier, and the streamer also touted a 70% growth quarter over quarter in the subscriber base of the plan. New incentives have also been added to the plan over time, like offering an ad-free episode when binging three in a row, to make the downside seem less painful overall.
What’s Next for Netflix?
With its newfound growth, Netflix is starting to make some big moves in an effort to keep ahead of its streaming rivals. Just yesterday, the company inked a monster 10-year, $5 billion deal with the WWE to air its Monday Night Raw program live. Live sports appears to be the next frontier Netflix wants to conquer after airing its first golf event last year, and its plans are clearly getting more ambitious on that front. Unfortunately, this may all come at the cost of the consumer, as the letter to shareholders said, “As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements.”
Stay tuned here at Collider for more on the future of Netflix as the company continues to make changes.
