Netflix pricing shakeup: New ad-free plans explained
While other streamers are pulling content from their digital shelves, Netflix continues its success in dominating the business – here’s everything you need to know about its latest earnings report, including a pricing shakeup, and plans for the future.
This year has been a turbulent one for Netflix subscribers, with the streaming juggernaut launching a worldwide password crackdown, putting an end to the age-old tradition of leeching off of families, friends, and exes’ accounts.
It’s safe to say people weren’t happy, especially given the ongoing cost-of-living crisis in many regions of the world, not to mention the fraught relationship between streaming studios and creatives amid the ongoing writers and actors strikes.
For more on the streamer’s latest moves, here’s what you need to know following Netflix’s 2023 Q2 report, including the removal of its ad-free plan, a drop in share prices, and where it stands on live sports.
Netflix axes ad-free plan in US and UK
Ahead of releasing its 2023 second quarter earnings, which ended on June 30, Netflix quietly axed its basic ad-free plan in the US and UK, a move it had already carried out in Canada. This means new subscribers can no longer enjoy the $9.99 per month ad-free Basic Plan.
As per its website: “The Basic plan is no longer available for new or rejoining members. If you are currently on the Basic plan, you can remain on this plan until you change plans or cancel your account.”
This comes after Netflix launched the $6.99 a month plan, which allows subscribers to pay less with adverts. For those who don’t want to deal with ads, next in line is the Standard plan, costing $15.49 per month, with extra member slots at $7.99 each following the password crackdown.
The Premium plan is currently $19.99 a month, and as is the case with the Standard, it’ll cost $7.99 a month for each new household added to the account.
As said by Deadline: “The move could nudge users to the cheaper ad-supported plan and doesn’t compromise the business since the vast majority of Netflix subscribers already take the $15.49 plan.”
Netflix says no more price hikes for “more than a year”
During the Q2 earnings interview, Netflix CFO Spence Neumann stated that the streaming giant is “more than a year out” from any price increases in its major markets, including the US.
The news will at least provide some solace to subscribers after Netflix launched numerous pricing shakeups in recent years, including its password crackdown leading to added costs, and its plan price hikes, which saw the Standard fee jump from $13.99 to $15.49 per month.
In quotes published by Variety, Neumann said: “We’re now more than a year out from any price adjustments in our big revenue countries. We largely paused them during the paid sharing rollout.
“Most of our revenue growth this year is from growth in volume, through new paid memberships. And that’s largely driven by our paid-sharing rollout. It is our primary revenue accelerator in the year.”
Netflix second quarter results show growth amid strikes
Despite growing unrest in Hollywood amid the writers and actors guild strikes, Netflix’s results show steady growth, with the company saying it added 5.9 million customers and witnessed a revenue of $8.2 billion during the second quarter.
According to the report: “In May, we successfully launched paid sharing in 100+ countries, representing more than 80% of our revenue base.” It went on to say that revenue in each region is now higher than pre-launch, and that signups are already “exceeding cancellations.”
The password crackdown and paid sharing initiative appears to have worked well for the media giant, with Netflix planning to roll it out to almost all of its remaining markets as of July 20, 2023.
Looking ahead, it said: “We expect that our revenue growth will accelerate more substantially in Q4’23 as we further monetize account sharing between households and steadily grow our advertising revenue.”
While some have congratulated Netflix for the results, a number of people have pushed back and criticized the promotion of its success amid the ongoing strikes, which largely focus on better pay for performers and writers in the streaming era.
Taking to Twitter, one wrote: “Netflix announcing this during the strike is either incredibly stupid or it’s them deliberately being a*sholes. They have no excuse not to pay their actors and crew fairly.”
Another said: “Netflix not only led the industry into the residual-free streaming model, it is now introducing ad revenue into that model, which subsidized network residuals, and is refusing to offer residuals in their contracts. Real ‘have our cake, eat our cake, let them eat cake’ stuff.”
Why did Netflix share prices fall after results?
Despite demonstrating growth from the year before, Netflix’s results and forecasts just missed estimates, causing its share price to drop nearly 9% in after-hours trading on Wednesday, 19 July, 2023.
Reuters reports that the streamer’s quarterly revenue climbed to $8.2 billion, and while this was up 2.7% from the year previous, it’s just shy of expert forecasts of $8.3 billion.
Similarly, while Wall Street analysts expected the third quarter to result in $8.67 billion revenue, Netflix’s report predicts sales to be at $8.52 billion.
“Shares of Netflix were down 8.9% after the results at $435,” stated the outlet, before quoting the second quarter report: “While we’ve made steady progress this year, we have more work to do to reaccelerate our growth.”
Netflix rules out possibility of live sports
During the quarterly earnings interview, Netflix CEO Ted Sarandos ruled out the potential for live sports streaming on the platform, saying it is more focused on unscripted sports programming.
Although other streamers have been jumping on the live sports streaming wagon, including Amazon’s Prime Video, Apple TV+, and Peacock, Netflix is yet to join the ranks – and it doesn’t look like this will be changing anytime soon.
Sarandos explained: “Our position in live sports remains unchanged. We’re super excited about the success of our sports adjacent programming. We just had it recently – just launched a great one called Quarterback with the NFL.
“A few weeks ago, we had Tour de France, which did exactly what we saw with Drive to Survive, which is introduced to a brand new audience to a sport that’s been around for a really long time and not very well understood, and you do that through exceptional storytelling, not through the liveness of the game.”
To read more about Netflix’s password crackdown rules, head here, and you can check out some of our other Netflix hubs below:
The Night Agent Season 2 | The Gentlemen | Sex Education Season 4 | Beef Season 2 | Monster Season 2 | Will there be Ginny and Georgia Season 3? | All the Light We Cannot See | Stranger Things Season 5 | Chicken Run 2 | Heartstopper Season 2 | Florida Man Season 2 | Obsession Season 2 | The Sandman Season 2