Netflix‘s lowest-cost, ad-free plan is coming to an end in Canada.
The streaming giant revealed this week that it plans to retire the no-ads Basic plan in Canada starting in the second quarter of 2024, making Canadians some of the first in the world to have the Basic plan axed, alongside the U.K. Other markets will have their Basic plans wind down at a later date, which is yet to be confirmed.
The Basic plan, currently priced at $11.99 per month, will disappear and customers will be prompted to move to the similar no-ads Standard plan at $16.49 per month, or select a different plan. The option to add extra member slots to the Standard plan will be available at $7.99 per month.
The phase-out of Netflix Basic comes after the company stopped offering it to new subscribers in markets including the U.S., Canada and the U.K. in 2023.
Netflix did not confirm to Global News the exact date when Canadians can expect to see the move to a Standard plan and increased pricing, nor how the option to switch plans will be communicated to customers, instead directing users to the shareholder report and the Canadian pricing plan.
The company still offers a Standard plan with ads for $5.99 per month or users can pony up the extra cost for a Premium plan, which supports additional device and download permissions as well as Ultra HD capabilities, for $20.99 per month.
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In a letter to shareholders Monday, reporting results from the fourth quarter of 2023, Netflix outlined its reasoning for the plan changes.
“We seek to provide a range of prices and plans to meet a wide range of needs, including highly competitive starting prices,” the company wrote. “As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service.”
In a Q4 earnings interview, co-CEO Greg Peters stressed that the ad-supported Standard tier is designed to offer more overall value than its predecessor Basic plan.
With the ad plan, customers “get a better plan than Basic, more streams, higher resolution with downloads. And of course, the real benefit is they get access to all these amazing stories at a lower effective price,” Peters said.
Netflix signalled it will try to justify the higher subscription prices — and perhaps reel in more advertisers to the low-cost plan that includes commercials — with a $10-billion deal announced Tuesday that will bring the WWE’s popular wrestling program, Raw, to its service.
Peters predicted it will be several years before ad sales bring in significant revenue. But the company is still benefiting from the $6-per-month price for the plan with commercials, with that option now accounting for about 40 per cent of its new subscribers in the markets where it’s available.
Peters told analysts that Netflix remains confident that it can still convince more viewers now using the passwords of paying customers to ante up for their own plans.
“That (crackdown) will improve our growth for years,” Peter said.
Analysts have also been anticipating the company will amplify a push into video games that Netflix embarked upon in 2021 during the throes of the pandemic.
While emphasizing the video game segment remains relatively small, Netflix says it’s starting to see more subscribers spending more time on its service engaged in that pastime instead of watching TV series and movies.
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