- Netflix scraps its cheaper ad-free packages in Canada and the UK and must choose between ad-supported or more expensive one.
- Netflix’s subscription fees and advertising business boost its first-quarter operating income by 54% to $2.6 billion.
OUR TAKE
Netflix is not alone in making such changes. Amazon Prime Video is charging a new fee of $2.99 per month for ad-free viewing, or it will integrate ads into its content. In addition, major players such as Disney , Warner Bros Discovery’s Max and YouTube TV Premium have also raised prices.
–Zora Lin, BTW reporter
What happened
Social media users in Canada and the U.K. have been Posting messages saying they’ve been notified by Netflix that the company’s basic plan has been discontinued and they must choose between an ad-supported plan or a more expensive ad-free plan, the Verge reports on July 2.
Netflix notes that “AD programs now account for 40% of all Netflix sign-ups in our AD markets, and we intend to eliminate basic programs in some AD countries, starting with Canada and the U.K. in the second quarter.” The company has not said when it will cancel the plan for existing users in the United States.
Netflix says in April that subscription fees and booming advertising boosted its first-quarter operating income by 54% to $2.6 billion. The company also adds 9.3 million paying subscribers during the quarter, bringing its total global subscriber base to nearly 270 million.
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Why it’s important
Netflix’s removal of the basic ad-free package could convert some of its basic subscribers into those willing to pay more or watch ads, directly increasing the company’s revenue and enhancing its earnings potential.
Netflix’s move marks an important shift in its business model. The company has largely relied on an ad-free subscription model in the past, but has now expanded its target market further by introducing ad-supported services.
By offering packages with different prices and services, Netflix is able to respond more flexibly to market changes and user needs, and diversified market strategies help it maintain market share and growth momentum, demonstrating its forward-looking and strategic vision for future development.
