Netflix Inc. made a strategic move by discontinuing its cheapest streaming plan without ads in the U.S. and U.K. This decision aims to drive more users to sign up for its advertising-supported service.
Changes in Pricing
Effective immediately, Netflix’s Basic plan, which previously cost $9.99 per month in the U.S. and £6.99 per month in the U.K., will no longer be available for new or returning members in those countries. However, existing Basic members have the option to continue their subscription until they decide to change their plan or cancel their account.
Last month, Netflix discontinued the Basic plan in Canada as well.
Potential Impact on Revenue and Earnings
According to Peter Supino, an analyst at Wolfe Research, this decision to eliminate the Basic plan could potentially boost global revenue by up to 4% and significantly improve global earnings before interest, taxes, depreciation, and amortization (Ebitda) by as much as 11% in 2026. Supino believes that this move will greatly benefit Netflix’s future forecasts.
Shift to Ad-Supported Plan
During Netflix’s earnings call in April, it was revealed that the ad-supported model generates higher average revenue per customer than the $15.49 monthly Standard plan.
Availability of Ad-Supported Plan
Netflix offers its ad-supported plan in various countries including the U.S., U.K., Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, and Spain.
These recent changes in Netflix’s pricing and plans come just hours before the company announces its fiscal second-quarter results.