Against the backdrop of the writers and actors strikes, I wonder how long it will take before the different streaming services run out of new content. Not that it matters much to me personally, since my TV viewing habits form an inverse graph with the escalating output of new series. The more stuff that gets released, the fewer things I watch with each passing year. Part of it is sheer choice paralysis. But Netflix has in part reinforced my commitment-phobia by ruthlessly cancelling so many shows after one or two seasons. Rather than adapting to a “limited series” model that’s a little more common in the UK, where many shows last one season but have a satisfying story ending, Netflix lets their shows end on cliffhangers most of the time. So why would I invest in something new when it’s not likely the story will have a good resolution? But despite industry-wide disruptions from the strikes and general streaming fatigue, Netflix is pretty confident it can get people to sign up or renew their subscriptions. So confident, in fact, that they are eliminating their cheapest ad-free plan, which was $9.99 a month. That means new subscribers have to choose between the $15.49/month Standard plan, or get a worse experience with the ad-supported plan.
Netflix is no longer offering its cheapest streaming plan without ads in the U.S. and the U.K., with the company aiming to push value-conscious consumers to sign up for its advertising-supported package.
The Basic plan, which provided a single stream for $9.99/month in the U.S. and £6.99/month in the U.K., is no longer available “for new or rejoining members” in the respective countries. According to Netflix, existing Basic members can “remain on this plan until you change plans or cancel your account.”
The elimination of Netflix’s Basic plan is designed to boost customers on the ad-supported Standard With Ads, which the company first launched last November. In May, Netflix said it had signed up more than 5 million members for its ad-supported plans, with 25% of new subs taking the package.
“Our starting prices of $6.99 in the U.S. and £4.99 in the U.K. [for Standard With Ads] are lower than the competition and provide great value to consumers given the breadth and quality of our catalog,” a Netflix spokesperson tells Variety.
The company dropped the Basic plan in Canada last month. The move to end the Basic plan in the U.S. and U.K. comes as Netflix is set to report Q2 2023 earnings Wednesday after the market closes. Analysts expect Netflix to report a sizable lift from its new paid-sharing program, the company’s attempt to monetize illicit password sharing that launched widely during Q2 in the U.S. and several other countries.
In reporting Q1 2023 earnings, Netflix said that in the U.S., the ad-supported plan already was producing higher overall average revenue per customer (aka ARPU) than the $15.49/month Standard plan. That implies the company was generating at least $8.50/month in ad revenue per subscriber on the Standard With Ads plan.
Netflix’s Standard With Ads provides viewing on up to two devices simultaneously (as with the no-ads Standard plan) but does not provide offline viewing or the option to add an extra member. The plan serves an average of 4 minutes of unskippable ads per hour.
I think I have the standard plan but I question its value on a weekly basis. Anyway, I think this represents something of a sea change for the streaming model. By essentially forcing their most price-sensitive consumers into watching ads, Netflix is implicitly admitting that their original business model has failed. They already started cracking down on password sharing which was not great for public perception of the brand. I think they will start funneling more and more people at higher price points into watching ads somehow. Maybe the ‘standard’ plan which is the next step up will start having 2 minutes of unskippable ads each hour, instead of the basic plan’s 4. Maybe they’ll explore the a-la-cart nonsense of Amazon Prime. I don’t know what the point is to subscribing to the damn thing if you have to purchase most movies and TV shows separately anyway. I put up with it only because Amazon has a decent variety of older movies and Netflix has systematically removed anything filmed before, like, 1985. But I really think the days of ad-free, all-you-can-watch TV shows and movies–that Netflix pioneered–are going to be over soon. And in the end I’m not so sure it’s a bad thing, when the streaming business model has made working conditions so bad for so many people.
photos from Netflix’s LA headquarters and top shows including Lincoln Lawyer, Quarterback and The Out-Laws courtesy of Netflix
I’m personally happy to pay whatever would lead to fair compensation for the creatives that make streaming possible… provided there are also contractual changes that make it actually happen (and that extra revenue doesn’t just go to top executives). IMO streaming is such a better service than cable (no ads, downloads on my phone for travel, on demand everything, etc.), and it should be priced as such.
I watch kdramas – not made by Netflix – on Viki.
I’ll never go back.
There are so many positives with Netflix while staying cheap for y e a r s. If I gave up any streaming services Netflix would be the absolute last.
I stopped watching regular tv because of ads.
If they all become like that, I will just watch my favorite kpop groups playing games on youtube, which is more funny and entertaining than a lot of series anyway. With an adblocker.
I hate ads so much. Not going to waste time on them in my free time.
That’s why I basically stopped watching TV live and now just dvr everything. Then I can ff through all the ads and get through each show and movie sooner.
So I think raising the prices is fine IF that means workers on the shows/movies are getting better compensation, more in residuals, etc. But, I feel like this is more about lining the executives’ pockets than increasing residuals for the actors.
I think a lot more people are going to subscribe to Netflix on an as-needed basis, instead of just letting the subscription go on indefinitely. (To me, it wasn’t even worth $10 a month every month anyway, but $15 is for sure a lol, no.)
I would guess though that people who are already on the $10/month plan are going to think twice before unsubscribing because they will pay a higher rate if they want to rejoin later. This could actually work out quite well for Netflix in terms of providing a more stable subscriber base. If you are on the $10/month plan and averages maybe 6 mos/yr, but now you decide just stick with it year round because who knows what the price will go up to when you want to rejoin, that’s an extra $60/yr in Netflix’s coffers.
That’s pretty much what I did. I bought myself a gift card and paid for a few months here and there until the card ‘ran out’ (I was on the standard HD plan.)
Once they raised their prices, however, I stopped because it wasn’t worth it. It would have cost close to $20 per month after tax here in Canada, and I currently have D+ and Apple TV for $21 combined. So…yeah. Bye Nettflix.
Hang on now. It’s not the subscriber cost of the streaming model that has led to the working conditions of writers and actors. There’s plenty of cash coming in – it’s the choice of streaming platform owners not to fairly distribute the income. It’s that there is no obligation for the streaming companies to publish viewing rates and therefore pay fair residuals.
Well said!!
Stockholders usually want more more more in any company and don’t care about working conditions of employees.
I keep Netflix primarily for Stranger Things and a few other shows that are comfort watches.
However, after the final season of ST aira (whenever that will be), I see myself reconsidering whether or not to keep Netflix.
If they released the entire ST series on DVD, I’d scoop that up in a heartbeat and kiss Netflix goodbye.
Between what their ceo took home in the last few years and the fact that they throw money at big stars to make expensive but not very good movies- i am not sure the original streaming model is a failure.
I think netflix, is greedy, stupid and has a bad sense of what a good movie will be.
Something weird is going on with Netflix in the U.K. My mother and I both tried to sign up for an account but it won’t accept either of our bank cards. We bank with different places, so it’s not a problem with one bank, it seems more widespread. So that’s two potential customers they’ve lost.
a quick call to your banks about approval might we’ll fix the problem.
I bet this is also because so many people are just jumping in and out for a month or two. Like me! I generally don’t do streaming in the summer, it stays light too late.
The actors are pointing out that now the streamers are going ad supported, they need to offer the same residuals as broadcast. My real problem with ad supported streaming is that it messes with being able to fast forward and rewind. Always glitchy. The other problem has been not having enough advertisers, so you end up watching the same ad every ad break. Also, the ad level doesn’t let you download.
The ad level doesn’t let you download? I didn’t know that.
I am going to be cancelling Netflix as soon as I finish this season of The Witcher. I would have cancelled it this month if they hadn’t pulled that 2 part drop. I don’t watch it often enough to justify the $15.49 – especially since I can’t share it with my elderly parents any longer. I’ll just get it for one month every year or two if I feel like I need to catch up on anything.
Instead, I’m going to increase my sustaining member amount to PBS. It’s the channel I watch the most anyway.