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Netflix Phases Out Ad-Free Basic Plan, Pushes Ad-Supported Tiers Amidst 13.1 Million Subscriber Growth

In a strategic shift, Netflix announced plans to retire its ad-free Basic plan, marking a significant move toward prioritizing ad-supported tiers. The streaming giant reported robust results for the fourth quarter of 2023, with a noteworthy addition of 13.1 million net subscribers. Netflix highlighted the success of its ad-supported plan, revealing that it accounted for 40% of all sign-ups in markets where it has been introduced, with over 23 million monthly active unique users on advertising tiers.

To further propel the adoption of ad-supported plans, Netflix disclosed its intention to phase out the no-ads Basic plan in select countries where the ad tier is available. The initial countries affected will be Canada and the U.K., starting in the second quarter of 2024, with potential expansions into other regions thereafter.

During the Q4 earnings interview, Netflix’s co-CEO Greg Peters emphasized the value proposition of ad-supported tiers, asserting that they offer a superior overall package compared to the Basic plan. Ad-supported subscribers receive additional benefits, including more streams, higher resolution with downloads, and access to a diverse array of content at a lower effective price.

While Netflix has experienced substantial growth in ad-supported subscriptions, Peters acknowledged that the advertising business is still in its early stages and stressed the importance of achieving scale. The company continues to focus on enhancing ad targeting and relevance to create a compelling advertising experience for users.

Addressing Amazon’s recent decision to make ads in Prime Video the default setting, Peters revealed that Netflix had considered a similar approach but ultimately opted against it. Netflix prioritizes preserving its long-standing ad-free experience for members while attracting those interested in ad-supported plans based on the associated benefits.

The decision to phase out Netflix Basic comes after the company ceased offering it to new subscribers in certain markets in 2023. Netflix had previously increased the price of the Basic plan and, with the move to retire it, aims to steer users toward the more dynamic ad-supported tiers. The phased withdrawal aligns with Netflix’s broader strategy to invest in and enhance its services, with occasional price adjustments reflecting these improvements.

Netflix’s ad-supported plans are currently available in several countries, including the U.S., U.K., Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, and Spain. The introduction of the Netflix Basic With Ads tier in November 2022 marked a pivotal step in diversifying subscription options, offering users a more affordable alternative with targeted advertising. The streaming giant anticipates future price increases as it continues to invest in service improvements, emphasizing a positive feedback loop of investment and growth.

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Ruben Jay
Ruben Jay
Ruben Jay is an American broadcaster, media blogger, and podcast host. Currently, Ruben is the President of MultiMediaMouth.com and the executive producer and host of the popular podcasts You’re My Best Friend and ON AIR with Ruben Jay, exclusively on MultiMediaMouth.com. Follow Ruben on Instagram, Twitter, and Tiktok @TheRubenJay.

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