Netflix (NFLX) said Thursday it is phasing out its cheapest ad-free streaming plan in the U.S. and France, following on from removing the subscription option in the U.K. and Canada last year.
The “Basic” plan had been available to US consumers for $11.99 per month after the company raised its price by $2 in October. The plan’s elimination comes as Netflix continues to tout the success of its ad-supported, $6.99-per-month service, which launched less than two years ago.
For those who want to watch without ads, Netflix offers plans starting at $15.49 per month.
“We have a very robust offering for our members,” Netflix co-CEO Greg Peters said of the ad-supported plan during the company’s second-quarter earnings call on Thursday. “We think this represents tremendous entertainment value, and it does include ads. Members who don’t want ads can choose our standard or premium plan without ads.”
Peters said the repeal of master plans overseas has been successful overall so far: “There was confidence in the U.S. and France to go ahead with that change, so that’s an indicator of progress.”
Netflix said in an earnings call on Thursday that it is “steadily expanding scale.” [its] In the “advertising business,” ad tier memberships increased 34% quarter-over-quarter, driven in part by the discontinuation of basic plans in certain markets.
“Given this continued progress, we believe we are on track to achieve significant advertising subscriber scale for advertisers in our advertising countries in 2025, and have a strong foundation for further growing advertising membership in 2026 and beyond,” the company said.
In May, Netflix revealed during its Upfront presentation that its advertising demographic had reached 40 million monthly active users worldwide, a significant increase from the 15 million users the company announced in November and an increase of 35 million over the same period last year.
The growth comes as the streamer increased its ad-free subscription prices to attract more users to its ad-supported service.
Netflix has announced that it will gradually phase out its ad-free basic plan in the United States and France. (Reuters/Lucy Nicholson/File Photo) (Reuters/Reuters)
Asked during Thursday’s earnings call whether the company would consider raising the ad tier price to $6.99 to increase average revenue per subscriber, Peters said, “We think about pricing for the ad tier very similarly to how we price our non-ad tier.”
“Our job is to increase the value we provide to our members,” Peters said, pointing to the company’s recent push into live events, as well as new original programming and games. [like acquisition, engagement, retention, and churn] And then find the right time to get members to pay a little more to keep that flywheel turning.”
The story continues
Netflix reported second-quarter earnings that beat expectations on both revenue and profit, and that it had added more than 8 million subscribers. But it wasn’t all good news: Shares initially fell after the streaming giant’s current-quarter revenue guidance fell short of Wall Street expectations.
Shares have since recovered and are trading slightly above flat in after-hours trading.
Editor’s note: This article has been updated to reflect the current U.S. price of the Netflix Basic plan after a series of recent price increases.
Alexandra Canal is a senior reporter at Yahoo Finance. Follow her at Yahoo Finance. Translatorvisit me on LinkedIn or email me at alexandra.canal@yahoofinance.com.
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