Netflix stops offering cheapest ad-free plan to new signups

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Netflix has stopped selling its cheapest ad-free plan to new subscribers in the U.S. and U.K.

The plan, which sold for $9.99 a month, has been closed to new and returning signups, the company announced July 19, 2023.

Instead, users who want an advertising-free Netflix experience must pay $15.49 a month, or about $5 more.

The plan was initially eliminated in Canada, but is now being halted in the U.S. and U.K. markets, according to the company (pricing varies based on local currency).

Existing subscribers to the $9.99 a month plan will be allowed to keep their pricing for the time-being, though it’s not unheard of for streamers to hike prices on existing subscribers or force them into more expensive plans.

The change does not affect the cheapest Netflix plan — a $6.99-a-month tier.

This plan, however, forces users to watch an average of up to four to five minutes of advertising per hour.

Netflix says that it is seeing trends toward users selecting the ad-supported plan in many markets, with up to 25% of new subscribers selecting that option.

Earlier in 2023, Netflix acknowledged that overall average revenue per plan is higher on the ad-supported option despite it being about half the price of the $15.49 plan. However, the $6.99 plan still accounts for a relatively small portion of overall subscriptions, so its net effect on revenue is relatively small.

Netflix has a deal with Microsoft to sell its advertising.

Despite what is likely a wealth of demographic data available to Netflix from its own internal tools alongside aggregation with third-party tracking, the streamer has held back from offering advertisers more extensive targeting abilities, likely in response to growing concerns over privacy and marketing using consumer data.

Advertisers are able to target viewers based on the region of the world and genre of the content being watched. Marketers can also opt to restrict their ads from appearing in content with advisories such as nudity and sex.

Netflix’s move to eliminate its $9.99 plan could be seen as an attempt to boost overall revenue by forcing new or returning subscribers to pick between paying $5 more a month or being forced to watch ads. If the trend of higher-revenue-per-subscriber on the ad-support plan continues, this strategy could be key to keeping financials up as streaming becomes more and more competitive and costs increase.