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Netflix has a plan to get you paying more for a subscription
Netflix will begin phasing out its most affordable ad-free option, the company announced Thursday.
The streaming giant had already stopped accepting new customers for the Basic plan, which costs $11.99 per month, last October.
But existing Basic plan subscribers were still able to continue with their current plan.
But now Netflix has said it is fully retiring the tier - and existing customers, in the tens of millions, will have to move over to another plan.
Basic plan users seeking an ad-free experience on Netflix will now have two options: the Standard plan at $15.49 per month or the Premium plan that has 4K at $22.99 per month.
Or customers can move to the ad-supported plan, which costs $6.99 a month .
Netflix is phasing out its Basic plan for existing customers. The streaming giant had already stopped accepting new customers for the plan, which costs $11.99 per month, last October
Netflix announced the same move for Canada and the UK in January - where customers are increasingly reporting they are being contacted to move plans.
If Netflix follows that time scale for the US, customers in America will get warnings later this year or early next year.
Customers have reacted to the axing of the Basic plan on social media.
On Reddit, one user wrote: 'They’re taking away the plan that most people have had for years and forcing them into a higher tier.
'That’s a great plan to force people back out to the high seas!'
Meanwhile, later on Thursday, Netflix said it added more than 8 million subscribers in its second quarter - from April to June.
The streaming service benefited from a password-sharing crackdown and such titles as 'Bridgerton,' 'Baby Reindeer' and 'The Roast of Tom Brady.'
While the subscriber gains topped analyst predictions of 5 million, Netflix also cautioned that third-quarter subscriber gains would be lower than the comparable period in 2023 when the password-sharing crackdown had just started.
Netflix also said its vice president of ad sales, Peter Naylor, was leaving the company.
In a letter to investors, the company said it did not expect advertising to be a primary driver of revenue growth until at least 2026.
Netflix shares fell 2 percent in after-hours trading to $630.06.
At the end of June, the new sign-ups brought the total number of global Netflix subscribers to more than 277 million.
The streaming video pioneer is facing saturation in the United States and told Wall Street last quarter that it plans to stop regularly reporting new subscriber additions next year.
Investors have been monitoring the growth of Netflix's ad-supported tier, which has been fueled by the company's crackdown on password-sharing, pricing increases for ad-free tiers and new consumer bundles, such as Comcast's 'StreamSaver' bundle, which combines Netflix with Peacock and Apple TV+.
Netflix said its ad tier membership grew 34 percent from the prior quarter, but it did not say how many subscribers chose that option.
'Our ad business is growing nicely and is becoming a more meaningful contributor to our business,' Netflix said in its letter to investors. 'But building a business from scratch takes time - and coupled with the large size of our subscription revenue - we don't expect advertising to be a primary driver of our revenue growth in 2024 or 2025.'
The company said it expects third-quarter revenue growth of 14%, compared with a year ago.
NETFLIX PRICE RISES OVER TIME
Our interactive graphic below shows how prices have changed - and when new plans have been introduced.
After launching in 2011, Netflix kept prices mostly flat.
But, since 2016, Netflix has been steadily increasing the prices of its different services, usually around every two years.
For example, in October 2017, subscribers with the standard and premium subscription options found out that they would have to fork out an extra $1 a month.
May 2019 marked the first time that the streamer increased the price of its cheapest subscription option. Netflix basic subscribers had to pay $1 more a month - up from $7.99 to $8.99. The standard and premium subscription plans went up $2 - to $12.99 and $15.99, respectively.
In October 2023, as well as axing its $9.99 basic plan, Netflix also increased its premium ad-free plan, which allows users to add two extra members from different households - from $19.99 to $22.99 a month.