Netflix Is Phasing Out Its Cheapest Ad-Free Tier

Netflix is planning to completely phase out its Basic plan for subscribers. After stopping new and returning subscribers from singing up for the plan, the lowest ad-free subscription available, beginning last year, the streaming giant announced in its shareholder letter Tuesday that it will retire the Basic plan later this year, meaning subscribers still in that subscription tier will soon have to choose between ads or a price hike.

The decision to completely do away with the Basic plan comes amid growth for the streamer's ad-supported tier, which costs $7 per month. According to the earnings report, Netflix added 13 million new subscribers in the fourth quarter of 2023, per Variety. Of those new subscription, Netflix's ad-supported plan accounted for 40% of all Netflix sign-ups in countries where ads are offered, which was up 30% of new signups in the third quarter.

In an effort to drive even more customers to the Basic with Ads plan, Netflix said it will soon retire the no-ads Basic plan for existing subscribers of that plan where it has introduced the ad tier. The plan will retire in different territories over time and will begin in the UK and Canada in the spring. Netflix said it will then be "taking it from there," the company said in its letter to shareholders. It is unclear when the plan will disappear entirely in the U.S. The streamer initially stopped offering the Basic tier for new subscribers late last year.

Those currently still subscribed to the tier will be forced to choose between the three other subscription tiers currently available. The Basic with Ads plan currently costs $7.99 per month, with co-CEO Greg Peters saying customers "get a better plan than Basic, more streams, higher resolution with downloads. And of course, the real benefit is they get access to all these amazing stories at a lower effective price." The two ad-free options are the Standard plan for $15.50 per month and the Premium plan, which costs $23 per month.

However, it seems subscribers can soon expect to shell out even more money for a Netflix subscription. In its letter to shareholders, according to The Hollywood Reporter, the company indicated upcoming price hikes, stating, "as we invest in and improve Netflix, we'll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service." The company did not indicate when the next price hike would be enacted.