December 6, 2023

This photo taken in Krakow, Poland on June 08, 2023 shows the Netflix logo on a mobile phone screen and its website on a laptop screen.

Jakub Bolzycki | Nour Photos | Getty Images

Netflix To entice more people to sign up for its recently launched ad-supported option, the company has eliminated its cheapest ad-free plan in the US and UK.

About its plans and pricing PageNetflix outlined all of its subscriber options, noting that the basic plan, which costs $9.99 without ads, is no longer available to new or rejoining members. Current subscribers to the plan will not be affected unless they choose to change plans or cancel.

The move makes Netflix’s standard ad package ($6.99 per month) the cheapest option.

During last quarter’s earnings call, Netflix CFO Spencer Neumann said the “economics” of its ad-supported plan were higher than the base plan. “It’s actually even higher than our standard plan,” he said on the call, adding that advertising is incremental to its revenue and margins.

Former Netflix co-CEO Reed Hastings admitted late last year that he was slow to embrace advertising on the streaming platform because he was too focused on digital competition from tech companies. Shortly afterward, co-CEO Ted Sarandos told an investor conference that Netflix would likely offer multiple ad-supported tiers over time.

Standard and Advanced plan Monthly rates without ads are $15.49 and $19.99, respectively.

Like other media companies, Netflix has been looking to boost streaming profits, and advertising is seen as a key step in making that happen.

Likewise, Disney CEO Bob Iger said the company is relying on ad-supported streaming options for profitability.

Netflix launched an advertising tier late last year. Similar to the recent crackdown on password sharing, the plan comes after Netflix saw user growth stagnate and sought other options to boost revenue.

In May, Netflix told advertisers that the tier had 5 million monthly active users and that 25% of new customers signed up for the program when it was available.

Netflix reports earnings after the close on Wednesday, and investors will be closely watching the impact of new sharing policies and ad-supported programs on subscriber growth and revenue.