In an unexpected move, streaming giant Netflix Inc. (NASDAQ:NFLX) has decided to cease its most budget-friendly, ad-free subscription plan in several countries, including Australia.
What Happened: Netflix is discontinuing the Basic plan, previously priced at $10.99 monthly for Australian users. This change will affect new and returning subscribers, but current users will retain their existing plans, reported 9News.
Netflix mentioned in a shareholder letter that company growth is fueled by improvements in their services, such as dual streaming, high-definition video, and a programming catalog comparable to other plans.
Earlier, discontinuing the Basic plan in the U.S., U.K., Italy, and Canada reportedly increased the uptake of their ads and Standard plans.
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The company plans to initiate the same changes in Germany, Spain, Japan, Mexico, Australia, and Brazil next week. Moreover, they aim to launch downloads next month and incorporate the ads plan in device and ISP partner bundles.
The Standard with ads plan, priced at $6.99 per month, is the least expensive. The Standard and Premium plans follow at $16.99 and $22.99 monthly.
Additional members can join the top two tiers for an extra $7.99 per month.
Why It Matters: Netflix’s decision to end the Basic plan comes on the heels of a reported price increase for certain streaming plans in the U.S., U.K., and France, coinciding with a growth in new customer sign-ups.
As per a Benzinga report, the premium ad-free plan in the U.S. increased by $3 per month to $22.99. However, the entry-level, ad-supported tier remained at $6.99 per month.
This move also follows the company’s strong Q3 results, where Netflix reported a 7.8% YoY increase in revenue to $8.54 billion, exceeding the consensus estimate. The company’s earnings also beat the consensus estimate, rising from $3.10 to $3.73 per share.Â
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