Netflix announced in a letter to shareholders that it will be eliminating its basic plan for subscribers in the United States and France.
The letter to shareholders mentioned that Netflix’s decision to phase out the basic plan in the U.S. and France followed the company’s decision to do the same in the UK and Canada. Last summer, Netflix made the plan unavailable to new or rejoining UK and Canadian customers, reported Fox 4 KDFW.
“Essentially, we’re providing them a better experience: two streams versus one. We’ve got higher definition. We got downloads. And, of course, all at a lower price …. We think that represents a tremendous entertainment value. And it includes ads,” CEO Greg Peters said during a videoconference about the company’s second-quarter performance on July 18. “And for members who don’t want that ads experience, they, of course, can choose our ad-free Standard or Premium plans.”
The change was posted to the Netflix Help Center on Thursday.
“The Basic plan has been discontinued. You can change your plan anytime,” the website states.
The basic plan did not include ads and cost a U.S. subscriber $11.99 per month.
In the second quarter earnings report, the company explained how scaling the membership tiers has ultimately helped with membership growth for those with the “standard with ads” plan.
“[The Standard with ads plan’s] attractiveness ($6.99 a month in the U.S., with two streams, high definition, and downloads) — coupled with the phasing out of our Basic plan in the UK and Canada, which we will now start in the U.S. and France — has increased our ads member base by 34% sequentially in Q2,” Netflix stated.
Furthermore, the streaming company says that recent crackdowns on password sharing have helped create a boost in memberships. Netflix’s fourth-quarter earnings from 2023 show some of the most promising results following the pandemic’s slow economy, as previously reported by The Dallas Express.
Netflix currently has over 277 million subscribers — up more than 16% from 238 million subscribers in Q2 2023.
The streaming service projects revenue growth of between 14% and 15% for the fiscal year, on an operating margin of 26%.
As Netflix looks ahead into the next quarter, the company’s goals are to “sustain healthy revenue growth, expand our operating margin and grow free cash flow.”
In order to continue streaming Netflix content, basic plan subscribers will have to choose one of the other three membership options that the streaming company offers:
- Standard with ads ($6.99 monthly): Watch in Full HD on two supported devices at a time and download on two supported devices at a time.
- Standard plan ($15.49 monthly): Watch in Full HD and download videos on two supported devices at a time (with an option to add one extra member who does not live with you for $7.99 monthly).
- Premium plan ($22.99 monthly): Watch in Ultra HD quality on four supported devices at a time and download on six supported devices simultaneously (with an option to add up to two extra members who do not live with you for $7.99 monthly).