Netflix Shocks Subscribers: Breaking News on Cheapest Ad-Free Plan Removal After Crackdown on Password Sharing

Netflix has eliminated its lowest-priced subscription plan without advertisements, as the company continues to crack down on password sharing. Despite facing controversy due to recent measures, Netflix remains the leading streaming platform by a significant margin in an ever-evolving industry.

In line with their intensified efforts to combat password sharing, Variety has reported that Netflix's Basic Plan has been discontinued for users in the U.S. and the U.K. This removal is part of a broader strategy to incentivize cost-conscious subscribers to opt for the ad-supported tier. Existing customers on the most affordable ad-free tier will not be affected unless they choose to switch tiers or terminate their account.

Netflix's Subscription Tier Change Explained

Last November, Netflix introduced its Standard with Ads tier, priced at $6.99 in the U.S. and £4.99 in the U.K. Despite initial concerns about consumer acceptance of ads, this new tier has been successful. According to data from Netflix, approximately 25% of new subscribers are choosing the cheaper, ad-supported plans. Furthermore, the company claims that these ad-supported tiers are generating higher average revenue per customer compared to its standard plans.

The implementation of this recent change, along with Netflix's controversial crackdown on password-sharing, is a direct response to a slowdown in subscriber growth. After years of rapid expansion, Netflix disclosed last year that its subscriber base had contracted for the first time in a decade. With the increasing number of streaming services available and fierce competition from platforms such as Amazon Prime, Disney Plus, Max, Hulu, and Apple TV Plus, the streaming landscape has become highly competitive.

Many streaming services are now implementing significant cost-cutting measures, such as writing off movies and shows or licensing them to ad-supported services, due to a recent assessment of their content expenditure versus revenue and subscriber growth. Netflix, although it has not yet resorted to these measures, has taken steps such as cracking down on password sharing and implementing subscription changes. These actions are reflective of the broader changes occurring in the streaming industry.