Netflix discontinues its advertising plan in several territories

This means that current subscribers to the basic ad-free plan will be able to keep their subscription, but new subscribers will not be able to upgrade to this plan. This change reflects Netflix’s effort to increase its revenue through advertising and attract more users to its cheaper ad-supported option.

Over the past two quarters, Netflix has shown strong financial performance and a clear expansion and monetization strategy. In the first quarter of 2024, the company reported a 14.8% increase in revenue, reaching $93.7 billion, with a 77% increase in net income. This growth was driven by an increase of 9.3 million new subscribers, reaching a total of 269.6 million subscribers worldwide.

Netflix’s ad-supported plan has been a crucial component of this strategy. In Q1 2024, this type of subscription saw 65% growth in membership, accounting for over 40% of new subscriptions. The elimination of the ad-free Basic plan is a move to further consolidate and promote the ad-supported plan, which offers a more affordable entry for new users while generating additional revenue through advertising.

The elimination of the basic ad-free plan could have several implications for Netflix and its users, according to what the company itself has expressed in its press releases and calls with investors:

Increased advertising revenue: By incentivizing more users to subscribe to the ad-supported plan, Netflix can significantly increase its advertising revenue, which is essential to maintaining its financial growth. In addition, it can attract a broader user base looking for affordable entertainment options.

Subscriber retention: While current subscribers to the ad-free Basic plan can keep their subscription, this change could push some to switch to other plans, depending on their needs and preferences.

Although all the company’s options are still in place in Mexico, the beta version of its ad-supported program was launched in some markets such as the United Kingdom and then the strategy was continued in other territories. Although Expansión sought the brand’s position on the changes in the local area, there are still no changes in its subscription plans.