Netflix plans to to retire its ad-free Basic plan in some countries where ad-supported plans are available, starting with Canada and the UK in Q2 2024

Although Netflix no longer allows new or returning members to sign up for the ad-free Basic subscription that costs $11.99 per month …

The Verge 2024-01-24 Emma Roth

Context & Ripple Effects

Netflix introduced its lower-priced ad-supported option across 12 markets in 2022, with limits on resolution, downloads, and some titles. This retirement extends the shift away from an ad-free entry tier after Netflix had already closed Basic to new and returning members in the US and UK.

The change makes the ad-supported plan the lower-cost path in the affected markets rather than a parallel alternative. Later coverage described the planned phaseout for existing subscribers, indicating this is a subscription-lineup simplification rather than a temporary sign-up restriction.

First-order effects

Basic subscribers in Canada and the UK will need to select an ad-supported plan or move to a higher-priced ad-free option as the tier is retired.
Netflix removes a lower-priced ad-free choice in markets where it can steer price-sensitive viewers toward its advertising product.

Second-order effects

A larger share of lower-cost Netflix viewing can become addressable ad inventory, making subscriber migration consequential for Netflix's advertiser proposition as well as its subscription mix.
Other streaming services must weigh whether keeping a cheap ad-free tier is a differentiator or whether it undercuts adoption of their own ad-supported offerings.

Third-order effects

If repeated across markets, streaming entry tiers may increasingly be organized around advertising, with ad-free viewing reserved for higher-priced plans rather than treated as the default low-cost option.
The move is an example of Netflix's broader Basic-tier withdrawal and could reinforce a market structure in which plan design is used to manage both subscription revenue and ad reach.

The trend: Subscription video services are reshaping price ladders to make ad-supported viewing the mass-market entry point while monetizing ad-free access as a premium feature.

Discussion

@thetranscript_ @thetranscript_ on x
$NFLX Co-CEO: Netflix has 23M MAUs in ad tier: “Our top ads priority...is scale. We saw a 70% QoQ growth in Q4 23, after a 70% QoQ for Q3 23 & then 100% in Q2 23. So that's a good trajectory to be on. We're now at 23M MAUs& we see that continuing to grow in the quarters ahead”
@thetranscript_ @thetranscript_ on x
$NFLX slowly resuming price increases: “We had talked about previously how we largely put price increases on hold while we were rolling out the patriarch work because we saw that as a form of substitute price increase. Now that we're through that, we're able to resume our sort...
@alex @alex on x
netflix the moment i see one fucking ad, i'm out
@tvmojoe @tvmojoe on x
If you have a Netflix Basic subscription in UK or CAN, it's going away. It hasn't been offered to new or returning subs since last summer. Now? “We're looking to retire our Basic plan in some of our ads countries, starting with Canada/UK in Q2 and taking it from there.”
@tvgrimreaper @tvgrimreaper on x
Netflix doing to its Basic subscribers what Amazon Prime Video is doing. Switching everyone to ads. That's another giant chunk of video ad inventory that's going to suck $ out of linear TV.
@tim_bays Tim Baysinger on x
Hey Raw isn't going to pay for itself
@sherman4949 Alex Sherman on x
GREAT news for consumers! You're going to have to pay more for Netflix soon. Come on! That means the economy is jumping! Consumer confidence soaring! And just think of all the great content you'll be paying for! https://www.cnbc.com/...

Chronicles