Netflix
has killed off its lowest-tier ad-free subscription plans both in the U.S. and the U.K., the company confirmed, as it looks for ways to boost revenue amid a maturing market for streaming services.
The Netflix (ticker: NFLX) Basic plan, which had been priced at $9.99 a month, will remain in place for current subscribers, but is no longer available to new customers. New U.S. subscribers can now choose from a $6.99-a-month ad-supported plan, a $15.49 standard plan, and a $19.99 premium plan that includes more simultaneous streams and better video quality.
The moves came just ahead of the company’s June quarter earnings report, due after the close of trading on Wednesday.
On its earnings call last quarter, Netflix indicated that early results suggested the ad model actually generates more revenue from ads and subscription fees combined than the Standard model—which clearly made the Basic model far less appealing to the company.
Netflix has taken a number of steps to boost revenue growth, including not only the ad-based subscription tier, but also a crackdown on password sharing. Investors are bullish on the moves: Netflix shares this year have rallied 62%.
Write to Eric J. Savitz at [email protected]
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