Netflix Nixes Its Cheapest, Ad-Free Plan in the US

The Netflix logo at the entrance to Netflix Albuquerque Studios film and television production studio lot in Albuquerque, N.M., on Oct.13, 2023. (Patrick T. Fallon/AFP via Getty Images)

Netflix is phasing out its lowest-priced, advertising-free subscription plan in the United States with hopes of increasing its ads-member base.

The California-based streaming giant told shareholders in a letter on July 18 that it would begin phasing out its Basic ad-free plan, which was priced at $11.99 per month, in the United States and France. Netflix said it had already phased out the plan in the UK and Canada.

The Basic plan is no longer offered on the company’s Plans and Pricing webpage for new U.S. customers. In July 2023, the company stopped offering it to new or returning subscribers.

Currently, new or existing customers who want to change plans can choose from three monthly options: Standard HD quality with ads at $6.99; Standard HD quality without ads at $15.49; and Premium Ultra HD without ads at $22.99.

Netflix began offering the Standard with ads membership in November 2022.

“Just over 18 months since launch, we continue to scale our ads tier, which now accounts for over 45 percent of all sign-ups in our ads markets,” the company said.

Netflix said the “attractiveness” of the $6.99 plan, along with phasing out the Basic plan in the UK and Canada, had increased ad-supported subscriptions by 34 percent in the second quarter of 2024. It reported a record 277.65 million subscribers during the same quarter, an increase of 16.5 percent year over year.

The company said it is also creating an in-house ad tech platform that will begin testing in Canada later this year and, more broadly, in 2025.

Netflix has reported three consecutive quarters of double-digit revenue growth, with $9.56 billion in the second quarter of 2024, up by 16.8 percent year over year.

The company said it is forecasting 14 percent year-over-year revenue growth in the third quarter and 14–15 percent revenue growth for the full year.

Netflix told shareholders that starting in July, it will release a new video game each month, based on Netflix TV series or films, including “Emily in Paris” and “Selling Sunset.” The company launched its video game initiative about three years ago, according to the letter.

Netflix launched its DVD-by-mail service in 1998. Less than a decade later, in 2007, it introduced its streaming service. Last September, the company shuttered its mail order service.

“Netflix has come a long way since we mailed out our first DVD in 1998,” the company told shareholders. “But we’re nowhere close to where we want to be in the future. It’s why we focus so relentlessly on improving our entertainment offering.”

Netflix shares were trading at $633.34 per share, down 1.51 percent for the day.