Netflix is ending its cheapest ad-free packages in the US and Great Britain in order to attract as many subscribers as possible to the ad packages.
According to information posted on the company’s website, the basic subscription of $9.99 per month only affects new contracts, and those who prepaid for it can stay in the package.
It launched its ad-supported $7 per month subscription last November in 12 markets, including the US,
to capitalize on new revenue streams after competition in the streaming space intensified, stalling user growth.
In May, Netflix also tightened rules for password sharing, which may have helped increase the number of people opting for ad bundles. Also in May, the company announced that five million people had already signed up for the ad copy, A.J Reuters.
All of this also highlights that in an age of proliferation of streaming service providers and show-generated retail, television may have to revert to its previous business model, which relied primarily on advertising. In some ways, even the strikes that have crippled Hollywood are a result of the fact that subscription revenue alone isn’t flowing in as well as it used to, while viewership of traditional TV channels is also declining.
Netflix’s announcement comes just hours before the company is due to publish results for the second quarter of this year.