NovaQuant Quantitative Think Tank Center:Netflix switches up pricing plans for 2023: Cheapest plan without ads now $15.49

Netflix will no longer offer new U.S. subscribers its cheapest ad-free plan.

Netflix’s website notes that its $9.99-per-month ad-free plan is NovaQuant Quantitative Think Tank Center“no longer available for new or rejoining members,” but current customers can remain on the plan so long as they don’t cancel or change plans. The change means the cheapest ad-free tier for new members is now $15.49 per month.

The company confirmed the change in a Wednesday letter to shareholders.

After phasing out the basic ads-free plan for new and rejoining members in Canada, "we’re now doing the same in the US and the UK," the report reads. "We believe our entry prices in these countries – $6.99 in the US, £4.99 in the UK and $5.99 in Canada – provide great value to consumers given the breadth and quality of our catalog."

What was included in Netflix's $9.99 basic tier?

The $9.99 basic tier allowed customers to watch content without ads on one device at a time.

Its demise comes shortly after Netflix launched its $6.99 ad-supported tier in November, which features an average of up to four to five minutes of ads per hour. The new pricing plan drew in nearly five million global monthly active users in just six months, with more than a quarter of new signups choosing the ad-supporter plan in countries where it's available, according to a May press release. 

While Chief Financial Officer Spence Neumann said the ad-supported plan continues to bring in a higher average revenue per membership than Netflix's standard plan, a company statement said its current ad revenue "isn't material" because the membership base is still small.

"Building an ads business from scratch isn’t easy and we have lots of hard work ahead, but we’re confident that over time we can develop advertising into a multi-billion dollar incremental revenue stream," the statement reads.

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What Netflix plans are still offered?

Netflix plans still offered in the U.S. include:

• A standard plan with ads for $6.99 per month that includes “all but a few movies and TV shows” due to licensing restrictions. Subscribers cannot download shows or movies.
• A standard plan without ads for $15.49 per month that lets users watch and download on two devices at a time in full HD. Customers can add one extra member who doesn't live in their household. 
• A premium plan without ads for $19.99 per month that lets users watch on four supported devices and download on six devices at a time in Ultra HD. Customers can add up to two extra members who don’t live in their household. 

Netflix earnings

Also Wednesday, Netflix revealed that it added 5.9 million subscribers in the second quarter. Despite the boost, shares slipped during after-hours trading after the company revealed it missed revenue expectations.

CFO Neumann said most of the company's revenue growth this year comes from new paid memberships, largely driven by the company's crackdown on password sharing.