According to The Hollywood Reporter, Netflix has recently hinted at increasing the price of their subscriptions as well as no longer having the Basic membership service as part of one of the packages. The company is planning to retire the cheapest ad-free option later this year after having another quarter in a row of strong growth in its ad-supported tier.
In Netflix’s earnings report it is stated that for the fourth quarter of 2023, subscribers of the ad tier generated 40 percent of new signups in countries where ads are offered. This is a ten percent increase compared to their third quarter in which ad-tier memberships increased to about 70 percent as well.
According to The Hollywood Reporter, Co-CEO Greg Peters stated on the company earnings call that the ad tier has currently 23 million monthly active users in the 12 countries in which the subscription package is offered. With this information, Peters expects a recurring trend for the future as the number will continue to grow. “A material impacter to our general business,” Peters said while acknowledging that it will most likely take years
Peters said, “Every market is different — there’s not a magic MAU number. But it’s fair to say there’s a lot of room for growth in all the markets we’re in.”
According to The Hollywood Reporter, Peters also went into detail how promotional bundles will play a great part in more subscribers. One promotion is T-Mobile’s “Netflix on Us” deal a free promotion that eventually turns back into the ad tier after the trial time is over. Due to the growth of the ad tier Netflix plans to move forward with their plan to retire their Basic membership tier in the next few months.
In a letter to the shareholders Netflix leader also mention that the they plan to increase subscription prices. They stated in the letter, “as we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service.”