Netflix, one of the world's most popular streaming services, recently announced that it will soon remove its most affordable ad-free plan internationally. This decision, revealed in the fourth quarter of 2023 earnings report, caused controversy and dissatisfaction among users.
Netflix, according to the financial report published on January 23, plans to "retire" its Basic plan starting in the second quarter of 2024. US users can no longer opt for the Basic plan from July 2023, and now Netflix plans to remove it in other countries, starting with users in the UK and Canada.
Netflix has not set a specific date for the disappearance of the Basic plan in these countries, nor has it specified which other countries will be affected. The main reason for this change appears to be Netflix's strategy to promote its ad-supported plan, launched in November 2022, which has been unexpectedly successful.
Contrary to analysts' expectations that ad-supported subscription would be a failure, ad-supported Netflix has seen remarkable growth, attracting 15 million subscribers in its first year since its debut. In January, the company announced an increase of eight million subscribers from November 2023, contributing significantly to the 13 million new users registered in the fourth quarter of 2023. Thus, Netflix's fan base reached 260 million, with 40 % of new users opting for ad-based plan.
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Netflix, with the popularity of the ad plan, generated considerable revenue, improving its profitability and confirming the success of its strategy. This innovative move has also led to other major streaming providers such as Disney Plus, Max and Prime Video introducing similar plans.
Netflix's decision to ditch its cheapest ad-free plan and make the Ads-only plan the default option for those on a budget has sparked frustration. From a business perspective, eliminating the Basic plan makes sense given shareholders' desire to maximize profits. Netflix thus encourages new users to opt for the more expensive plans (Standard and Premium) or the ad-based one, which is in high demand.
Many users of the Basic plan do not want to be forced to switch to another plan. They prefer not to watch commercials while enjoying the best Netflix series and documentaries, which they can do on other ad-supported channels. I also don't see the point of upgrading to Standard or Premium just to watch your favorite movies on Netflix. They don't need to stream content to two different devices or download movies and series for offline viewing. The Premium plan, with its perks like spatial audio and ultra HD, isn't attractive to everyone.
Netflix has many users who are happy with their standard subscriptions, who don't want to change it just because the company thinks so. With Netflix hinting that it will raise prices again — "we'll occasionally ask our members to pay a little more to reflect these improvements," according to its latest earnings report — the ad-supported plan will soon become as expensive as Basic.
