On Wednesday, the world’s largest streaming service reported an impressive quarterly increase in global subscribers, picking up over 8.75 million customers. However, buried deep in its letter to shareholders was news that we had anticipated, but nonetheless were not looking forward to; Netflix is raising its prices on some of its plans. For customers in the United States, United Kingdom, and France, effectively immediately, their Basic and Premium plans will be increasing in price.
- Netflix continues to push customers to its ad-supported plan by making cheaper ad-free options more expensive.
- The ad-free Basic plan was discontinued in July, but members on the plan were allowed to keep it, but prices will increase anyway.
- Prices will increase by $2 and $3 respectively, depending on the plan.
For domestic subscribers, Netflix’s ad-supported ($6.99) and Standard ($15.49) plans will not see a price adjustment, but the Basic plan will rise from $9.99 to $11.99 and the Premium option will go from $19.99 to $22.99. The Basic tier was removed as an option for new subscribers in July, but members who had been on that plan were able to keep it, as long as they did not make any changes to their account. While they are able to remain on the Basic plan, their price will be going up immediately.
Even though Netflix executives had said that they would not be raising prices until 2024, this move is the first rate hike since January 2022. Earlier this month when word of these potential rate increases first began to circulate, nearly 40% of customers indicated that they would cancel their Netflix plan if they had to pay more. Netflix’s move to target only the cheapest and most expensive ad-free tiers was obviously done in an effort to maximize revenue. Customers on the legacy Basic plan might be more likely to opt for the ad-supported tier, while those on the Premium option are more likely to be willing to pay $3 to keep all of the perks of the plan.
Related: Canceling Netflix After Price Increase Announcement? Check Out These Cheaper Services!
The importance of ad-supported plans has quickly become a cornerstone of this new era in streaming. The benefits of these types of options are that they can present a lower barrier of entry to more cost-conscious customers, while also providing streamers like Netflix an opportunity to make money from multiple fronts. Not only can they still collect subscription fees, but they also have the opportunity to generate additional revenue from advertisers. This generally means that the average revenue per user (or average revenue per membership, as Netflix defines it) is higher on the cheaper plans with ads than it is on the mid-price premium tiers. Therefore, increasing the price of the lower-cost ad-free plans can serve as either an additional source of revenue for customers who remain on their current plans, or as a way to drive more users to the more profitable ad-supported ones.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.