Netflix eliminating cheapest ad-free plan for US customers

Streaming giant Netflix announced it is nixing the Basic plan for U.S. and French subscribers as it reported its second-quarter earnings on Thursday evening.

Netflix said Thursday it is nixing the Basic plan for U.S. and French subscribers.

The move will require customers with the Basic tier to make a membership change to continue watching content on the streaming platform. 

"The Basic plan has been discontinued," the Netflix Help Center pages for both U.S. and French plans and pricing said Thursday morning. "You can change your plan at anytime."

Netflix charged $11.99 per month in the U.S. for the Basic plan and did not run ads.

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The elimination of the Basic plan in the U.S. and France, announced during the release of Netflix’s second-quarter earnings, follows all U.K. and Canadian audiences losing access to the plan earlier in the year.

Prior to that, Netflix had made the tier unavailable to new or rejoining U.K. and Canadian members and later to new or rejoining American customers. That happened last summer.

During that part of sunsetting the tier, only those already on the Basic plan could keep it.

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Netflix indicated on Thursday that dropping the Basic plan in the U.K. and Canada helped with growth of its membership to its ad-supported tier. Its password-sharing crackdown has also been beneficial.

The ad-supported tier’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 US and France – has increased our ads member base by 34% sequentially in Q2," the company said.

In addition to the "Standard with Ads" tier, Netflix has two plans – the $15.99-per-month "Standard" and the $22.99-per-month "Premium" – that do not include advertising.

The company reported having more than 277 million subscribers as of the second-quarter, with the U.S. and Canada accounting for over 84 million.

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Netflix projected it would see 14%-15% growth in revenue for the full year. Its annual operating margin, meanwhile, is forecast to be 26%. Both marked slight lifts from prior guidance.

"Our goal is to increase our operating margin each year, though the rate of expansion will vary year to year," the company said.