In its earnings report released on Tuesday, Netflix revealed plans to discontinue the ad-free Basic subscription in certain countries. The change will commence in the second quarter, starting with Canada and the UK.
Changes to Subscription Plans
As a result, the $15.49 per month option will become Netflix’s most affordable ad-free plan, marking a significant increase from the previous $11.99 per month. New subscribers in Canada were already restricted from signing up for the Basic plan last year, a change later extended to the US and UK.
Ad-Supported Offering Growth
The ad-supported offering by Netflix has reached 23 million monthly active users, emphasizing the company’s focus on scaling this service. CEO Greg Peters highlighted improvements to the ad-supported plan, such as enhanced resolution, multiple streams, and downloads. Netflix aims to make the offering more attractive by adjusting plans and pricing structures.
Subscriber Growth and Financials
Netflix reported an addition of 13.1 million subscribers in the final quarter of 2023, bringing the total global subscribers to 247 million. The company has experienced accelerated growth, achieving a 12% revenue increase and raising the operating margin to 21%, exceeding the 20% target. The free cash flow for 2023 reached $6.9 billion.
WWE Deal and Sports Expansion
Netflix announced a 10-year, $5 billion deal to stream WWE’s Monday Night Raw, marking a significant move into live sports. This follows Netflix’s recent ventures into live sports broadcasting, including golf and an upcoming tennis match featuring Rafael Nadal.
Financial Performance and Future Outlook
According to the report, Netflix achieved 12% revenue growth, up from 6% in 2022, and increased its operating margin to 21%. The company outlined its 2024 strategies, focusing on core content improvement, diversification into gaming and sports-adjacent programming, scaling the ads business, and enhancing fan connections.
Netflix’s Vision for 2024
Looking ahead, Netflix envisions opportunities to enhance core offerings (series and films), broaden its content spectrum (games, live, and sports-adjacent programming), and scale its ad business.
The company aims to deepen its connection with fans through marketing, consumer products, and innovative live experiences. Netflix expresses confidence in its potential for growth amid the expanding streaming landscape, focusing on thrilling members with exceptional entertainment.
On the announcement, Netflix shared in its report that:
In Q4‘23, echoing the previous quarter, our ads membership surged by almost 70% quarter over quarter, fueled by enhancements in our offering (such as downloads) and the discontinuation of our Basic plan for new and returning members in our ads markets.
Currently, the ads plan constitutes 40% of all Netflix sign-ups in our ads markets, and we’re considering the retirement of our Basic plan in select ads countries, commencing with Canada and the UK in Q2, with further evaluation in subsequent regions.