Netflix (NFLX) said Thursday that it will phase out its lowest-priced ad-free streaming plan in the US and France after removing that sign-up option in the UK and Canada last year.
The "Basic" plan had been offered to US consumers for $11.99 a month after the company increased prices by $2 in October. The removal of this plan comes as Netflix has touted the success of its less than two-year-old ad-supported offering, which comes at a cost of $6.99 per month.
For ad-free experiences, Netflix offers plans that start at $15.49 per month.
"We've got a very strong offering for our members," Netflix co-CEO Greg Peters said of the ad tier during the company's second quarter earnings call on Thursday. "We think that represents a tremendous entertainment value and it includes ads. For members who don't want that ads experience, they can choose our ads-free standard or premium plans."
Overall, Peters said eliminating the basic plan overseas has been a success so far: "We've had the confidence to move forward with that change in the US and France, so that's an indicator of how it's going."
In the earnings release Thursday, Netflix said it's making "steady progress scaling [its] ad business" with ad-tier memberships growing 34% quarter on quarter, boosted in part by the removal of the basic plan in certain markets.
"Given this sustained progress, we believe that we’re on track to achieve critical ad subscriber scale for advertisers in our ad countries in 2025, creating a strong base from which we can further increase our ad membership in 2026 and beyond," the company said.
In May, Netflix revealed during its Upfront presentation that its ad tier has reached 40 million global monthly active users — a significant jump from the 15 million users the company revealed back in November and a 35 million-user increase compared to the year-ago period.
The growth comes as the streamer has raised the prices of its ad-free subscriptions in an attempt to lure more users to its ad-supported offering.
When asked on the earnings call Thursday whether or not the company would consider raising the $6.99 price point of the ad tier to boost its average revenue per member, Peters said they "think about pricing for the ads tier very similarly to how we would think about pricing for our non-ads tier."
"It's our job to increase the value that we are delivering all of our members," Peters said, citing the company's recent live event push, along with new original programming and games. "When we have signals from our members [like acquisition, engagement, retention, and churn] then we find the right moment to ask our members to pay a bit more to keep that flywheel spinning."
Netflix reported second quarter earnings that beat on both the top and bottom lines while subscriber additions surged past 8 million. Still, it wasn't all good news. Shares initially traded lower after the streaming giant's revenue outlook missed Wall Street's expectations for the current quarter.
The stock has since recovered, hovering just above the flatline in after-hours trading.
Editor’s note: This article has been updated to reflect the current US price of Netflix‘s Basic plan after its recent round of price hikes.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].
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