Netflix is removing its cheapest ad-free plan: What to know
(NEXSTAR) — Netflix users taking advantage of one of the streaming service’s most affordable plans will soon have to decide between a cheaper ad-based plan, or a far more expensive plan without ads.
During a call with investors last week, Netflix confirmed it will phase out its Basic tier in the U.S. and France.
The Basic plan was previously the most affordable Netflix tier, available for less than $10 before a price hike in fall. Subscribers could access Netflix's full library, without advertisements, on one screen at a time.
It isn’t necessarily a surprise that Netflix is ending the tier altogether.
Last summer, Netflix did away with the plan for new subscribers. The company has since phased out the Basic tier for subscribers in Canada and the U.K. with the U.S. and France next to see it disappear.
A spokesperson tells Nexstar the company has already started contacting impacted users, who will have a billing cycle (30 days) to switch plans. The spokesperson did not say whether those members will automatically be put on a different plan.
For impacted subscribers looking to save a few dollars, Netflix has a “Standard with ads” plan at $6.99 a month. With this plan, users can watch “all but a few movies and TV shows,” watch on two supported devices at the same time, and download on two supported devices.
Greg Peters, co-CEO, president, and director for Netflix, said the cheaper, ad-based plan “represents a tremendous entertainment value.”
For $15.49 a month ($3.50 more per month than the Basic tier), users can select the “Standard” plan, which includes the same as the “Standard with ads” plan, minus the ads. An extra member can also be added to the plan. (Netflix rolled out the extra member option in an effort to crack down on password sharing.)
Since expanding into advertising and cutting down on freeloading viewers, Netflix has added nearly 55 million more paying customers and seen revenue surge.
Between April and June, Netflix added 8 million subscribers, marking a 37% increase over the same time last year. It was the sixth-consecutive quarter that Netflix's subscriber gains have increased from the previous year.
The company’s profit in its latest quarter rose 44% from last year to $2.15 billion, or $4.88 per share — a figure that exceeded the estimates of analysts polled by FactSet Research. Revenue climbed 17% from last year to $9.56 billion, also eclipsing analysts’ projections.
But management predicted its revenue for the July-September period would rise at a slightly slower pace of 14% from the same time last year, lagging behind the 18% growth that analysts had been anticipating.
The Associated Press contributed to this report.