In its earnings report for the fourth quarter of 2023, streaming giant Netflix says subscribers to the ad-supported tier account for 40% of new signups in countries where ads are offered – up from 30% for the third quarter.
Overall Netflix also reported ad-tier membership growth of about 70% for Q4 versus Q3 last year. It means the ad-supported tier has 23 million monthly active users in the twelve countries where it offers the plans – a number they expect will keep growing.
With that growth, the company has plans to retire its least expensive ad-free option, the ‘Basic’ tier, for all subscribers first in Canada and the U.K. in the Spring before doing so elsewhere throughout the rest of the year.
The company already stopped offering the ‘Basic’ tier for new subscribers late last year, now it will phase out that tier for existing subscribers in the coming months with those subscribers likely having to swap to one of the three current tiers – Standard with Ads, Standard or Premium.
Co-CEO Greg Peters is spinning this as “better overall value” as the Standard with Ads plan has “more streams, higher resolution with downloads… lower effective price”.
The shareholders letter also signaled potential price hikes, saying: “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.”
The company says its crackdown on password sharing will drive growth for “many years to come” along with “healthy organic growth” from TV, film and game content along with live events such as the just announced WWE long-term deal.