Netflix is planning new service price hikes and the cancellation of the cheapest ad-free package
Although, like many other online platforms, it has recently raised the prices of its services, Netflix is planning new price increases for the subscription packages it offers. But that’s not all, as one of those packages is about to disappear, the cheapest one that offers an ad-free movie and TV experience, and it’s being lost first by users in Canada and the UK.
The company decided on this move in order to increase its revenues in the new year, and in the letter to shareholders for the last quarter of last year, it states the following:
„As we invest in and improve Netflix, we will occasionally ask our members to pay a little more to reflect those changes, which further helps drive the positive development of additional investment to further improve and grow our service.“.
This statement is definitely unpleasant not only for the thrifty, but also for users in general, considering that they have recently suffered increases in subscription prices both from the Netflix platform and from other streaming services. In January 2022, Netflix raised the price of its basic ad-free package from $8.99 per month to $9.99. However, in October 2023, the same plan was raised to $11.99 per month, while the ad-free Netflix Premium package went from $17.99 to $19.99 for one month in January 2022, and then to 22 $.99 per month in October 2023.
Platfroma attributes the price increase to additional features, such as 4K gaming streaming. But subscription fees remain Netflix’s biggest source of revenue, giving it an obvious reason to leave open the possibility of even more price hikes in the near future.
Reshetnikov_art / Shutterstock.comNetflix has also used price increases to encourage users to subscribe to so-called Ad-tier level, where it achieved higher average revenue per user. Netflix with ads will cost $6.99 a month from November 2022 and has seen feature improvements, such as moving from 720p resolution to 1080p.
In its attempt to push users to watch ads on the platform, the company simply stopped offering new users the cheapest ad-free Basic package that costs $11.99 per month. It included 720p resolution, content downloads and single device support. That change then raised the cheapest ad-free package by 55.06 percent to $15.49 a month.
NetflixUsers who were already subscribed to the Basic package were allowed to continue using it, but it seems that that possibility has also come to an end.
In the letter to investors, the company also states:
„The ad package now accounts for 40 percent of all Netflix sign-ups in our ad market, and we plan to retire our Basic package in some of the countries, starting with Canada and the UK in the second quarter and continuing from there.“
Netflix originally discontinued the Basic plan in Canada before following suit in the US and UK. Considering that the majority of North American Netflix users come from the US, it is expected that Netflix will end the Basic plan there as well. However, it is still not clear whether and how these decisions will affect other countries in Europe, considering that they are not specifically mentioned, but rather the announcement is more of a group.
Netflix said this week that it doesn’t expect the same level of subscriber growth it enjoyed in 2023 in 2024, but it certainly expects double-digit revenue growth, writes ArsTechnica. That new money has to come from somewhere. If Netflix can’t get everything out of new subscribers, it will simply make it through existing users through higher package prices and definitely advertising, which is gaining momentum on streaming services.