Netflix has announced the discontinuation of its ad-free Basic subscription, which costs $11.99 per month. The streaming giant’s executives revealed during an earnings report that the plan is being retired in countries where ad-supported plans are available. This transition will begin in Canada and the UK in the second quarter of this year.

Changes to Netflix’s subscription tiers

Subscribers will now find the cheapest ad-free option priced at $15.49 per month, marking a significant increase from the $11.99 Basic plan. This shift leaves a notable gap between the ad-supported and ad-free plans. For those seeking a more affordable option, Netflix offers a $6.99 per month ad-supported plan, while the Premium tier remains at $22.99 per month.

Netflix had already stopped new subscriptions to its Basic plan in Canada last year before extending this change to the US and UK. The move reflects the company’s strategy to phase out the Basic plan in favor of driving more users towards its ad-supported offerings.

Ad-supported plan growth

In Q4 2023, Netflix reported a nearly 70% increase in ad-supported memberships compared to the previous quarter. This growth has been attributed to enhancements in their ad-supported offerings, such as the introduction of download capabilities and improved streaming quality. The ad-supported plan now constitutes 40% of all new sign-ups in markets where it is available.

Co-CEO Greg Peters highlighted the success of the ad-supported plan, noting that it currently boasts 23 million monthly active users. Peters emphasized that Netflix aims to expand this user base by continuing to make the ad-supported plan more appealing with features like higher resolution, multiple streams, and download options.

Netflix’s subscriber growth

Netflix reported adding 13.1 million subscribers in the final quarter of 2023, bringing its total global subscriber base to 247 million. This increase demonstrates the company’s ability to attract new users despite changes in its subscription plans.

The company has continuously introduced new features over the years, including 4K streaming and a venture into gaming. However, Netflix executives have indicated that these enhancements may come with additional costs. Last year, Netflix raised the prices of its Basic and Premium plans to reflect the value of its improved services.

Netflix’s expanding live sports portfolio

In a surprising announcement, Netflix revealed a 10-year deal to air WWE’s Monday Night Raw, valued at $5 billion. This agreement marks a significant shift for Netflix, which has traditionally focused on on-demand streaming rather than live sports. The deal includes a provision allowing Netflix to terminate the contract after five years.

Currently, NBCUniversal’s Peacock holds a library of WWE content but does not air Monday Night Raw live. Peacock will retain rights to WWE’s premium events, such as the Royal Rumble and Wrestlemania.

Netflix has been increasingly exploring live sports content. In November, it aired its first live sports broadcast, a golf competition between PGA professionals and F1 drivers. The company also plans to host a live tennis match in March featuring Rafael Nadal and Carlos Alcaraz. The WWE deal represents Netflix’s most significant step into the live sports arena to date.

Future outlook for the basic plan

As Netflix continues to evolve its service offerings, subscribers can expect occasional price adjustments to reflect the added value. The company remains focused on expanding its user base and enhancing its ad-supported plans to provide a more comprehensive viewing experience.

Netflix’s decision to retire the Basic plan underscores its strategy to prioritize ad-supported growth and invest in new content, including live sports. This shift aims to balance affordability with premium features, ensuring that Netflix remains competitive in the dynamic streaming market.