In a strategic move to boost its ad-supported tier, Netflix has discontinued its basic plan, allowing users to watch shows and movies without commercials, in the US and UK. The company aims to attract more subscribers to its new ad-supported offering and diversify its revenue streams amid increasing competition in the online streaming market.
Key Points:
– Netflix has removed the $9.99-a-month (about Rs. 820) basic plan for new and rejoining members in the US and UK.
– Existing users on the basic plan can continue to use it until they decide to switch plans or cancel their accounts.
– Last November, Netflix introduced a $7-per-month (about Rs. 574) option with commercials in 12 markets, including the US, as an alternative to the ad-free plans. This move aimed to attract more customers and generate additional revenue amidst growing competition.
– In May, Netflix cracked down on password sharing among households, prompting users to sign up for the cheaper ad-supported tier as an alternative.
– The ad-supported tier has gained nearly 5 million active users per month, showcasing the breadth of Netflix’s programming to potential advertisers.
– Analysts from Macquarie believe that Netflix’s crackdown on password sharing will drive more users towards its $6.99 ad-tier base, leading to increased advertising revenue.
– Netflix is scheduled to release its second-quarter results soon, where investors will assess the impact of the ongoing strike in Hollywood on the company.
By discontinuing its basic plan in the US and UK and focusing on its ad-supported tier, Netflix aims to attract more subscribers and bolster its advertising revenue. The move comes as the streaming giant faces increasing competition in the industry and seeks innovative ways to retain and expand its customer base. Investors will be closely monitoring the impact of this strategy, especially amidst the ongoing strike in Hollywood, to gauge the company’s performance in the second quarter.
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