TOPLINE
Streaming giant Netflix quietly eliminated its cheapest advertisement-free plan for new U.S. and U.K. customers this month, pushing new users toward either a more expensive monthly plan or a cheaper offer with ads, the latest streaming platform to adjust its pricing.
KEY FACTS
Netflix’s changes, which do not affect existing customers, leave new customers with the choice of a $6.99 per month “Standard with Ads” plan—the cheapest Netflix offers—as well as a $15.49 “Standard” plan, which allows for two simultaneous streams and 1080p full HD video quality, or a $19.99 “Premium” plan, with up to four simultaneous streams and 4K Ultra HD video.
The company eliminated its $9.99-a-month “Basic” plan and now states on its support page it “is no longer available for new or rejoining members,” a change multiple news outlets spotted Wednesday—as of July 5, the streaming giant still listed the basic subscription tier on its U.S. support site, according to an archived version of the webpage.
Under Netflix’s “Standard” plan, customers can opt to pay up to $23.48 a month for an extra member, while Premium users can pay $27.98 per month for one extra member or $35.97 for two.
The platform’s decision to cut its “Basic” plan comes one month after it cut the same offering for customers in Canada, and in the same fashion allows existing customers to stay on the plan.
TANGENT
The change puts Netflix, a stalwart in the decade-long streaming wars, roughly on par with Disney-controlled rivals Hulu ($7.99 per month with ads, or $14.99 ad-free) and Disney+ ($7.99 with ads and $10.99 ad-free). Warner Bros. Discovery’s platform Max, which launched this spring as a mega-service combining HBO Max and Discovery+, offers monthly subscriptions starting slightly higher, at $9.99 per month with ads and $15.99 without them, and $19.99 per month for “Ultimate Ad Free,” which allows for up to four simultaneous streams. Some legacy broadcasters have cheaper services: NBCUniversal’s Peacock and CBS owner Paramount Global’s Paramount+ both charge $5.99 per month with ads or $11.99 per month without (in Paramount’s case, the ad-free service includes SHOWTIME). And Amazon Prime Video costs $8.99 a month, but it’s included in a $14.99 Amazon Prime membership.
NEWS PEG
Netflix’s price change follows a series of price hikes by rival streaming services, including Peacock, which announced plans on Tuesday to raise rates from $4.99 per month to $5.99. The price for ad-free “Premium” subscribers is set to increase next month from $9.99 per month to $11.99, while Peacock’s annual premium plan will jump $10 per year to $59.99. Peacock ended its free streaming tier earlier this year.
KEY BACKGROUND
Netflix, as well as Max and Disney+, have raised rates in recent months and launched cheaper ad-based subscription options for customers, in a bid to boost revenue in a challenging era and remain competitive with more price-sensitive customers. Netflix’s rate of subscriber growth stalled in the first half of 2022 after two consecutive quarters of declining memberships, spooking investors, though the company ended the year with more subscribers. Meanwhile, rivals like Disney+ remain unprofitable. Despite previously swearing off ads on his streaming service, Netflix co-founder and former co-CEO Reed Hastings said in an earnings call last April he would be “quite open” to low-cost streaming tiers with ads. Last year, Netflix also raised prices for its streaming tiers by between $1 and $2 per month, bringing the basic option to $9.99 from $8.99 and its premium option to $19.99 from $17.99. Netflix has also cracked down on password sharing, a well-known secret the platform had once promoted, imposing restrictions in Canada, New Zealand and Spain, and announcing plans in May to prohibit U.S. customers from sharing accounts with people they don’t live with. In October, Netflix boasted 2.4 million new paid subscribers over the prior quarter, bringing its total subscribers to 230.75 million after months of decline, putting it above Disney+ (161.8 million), Paramount+ (56 million), Hulu (48 million) and Peacock (20 million).
FURTHER READING
Peacock Raises Its Rates: Here’s How It Compares To Rivals Netflix, Paramount+ And More (Forbes)