Netflix is about to get a lot more expensive for a huge chunk of its subscriber base.
The Los Gatos, CA-based streaming giant announced the death of its $11.99 Basic plan during the company’s recent earnings report.
The Basic Plan has been the cheapest ad-free option for subscribers since NetflixNFLX +1.5% began offering ad-based plans. Where ad-based plans have been available, Netflix has already stopped allowing Basic tier signups (though they jacked up the monthly bill last year) but until now anyone who was already on the plan could keep it. That’s all changing as the Basic tier is phased out entirely. This also comes on the heels of a major—and majorly successful—crackdown on password sharing.
With the Basic plan retiring, the next cheapest option is $15.49 per month for the Standard tier (aka, new Basic!)—a sizable increase over time—or $22.99 for the Premium tier. The ad-based tier still costs just $6.99 per month but comes with commercial breaks. Ditching commercials was, ironically enough, one of the biggest draws for consumers to move to streaming alongside the convenience of watching stuff whenever you want.
In other words, slowly but surely Netflix—and other streamers—are just transforming back into what we had before: A slightly altered version of cable television.
As the Basic tier is phased out, consumers can add yet another increase to their monthly bills. And before anyone says “It’s just $3.50 a month, that’s a small coffee at StarbucksSBUX +0.2% if you’re lucky!” the fact is that Netflix isn’t operating in a vacuum and consumers aren’t just watching their Netflix bill go up.
HBO, Apple TV+, Disney+ and Hulu, PlayStation Plus and so forth have all seen price hikes recently. So has the cost of housing, milk, bread, gas and on and on and on, and wages rarely keep up with this kind of inflationary pressure. On top of all this, consumers should start worrying about the future of commercials and streaming. Right now there’s only the $6.99 ad-based tier at Netflix but what’s stopping the company from making multiple tiers of ad-based memberships? Ad-lite could easily replace the Basic tier at $9.99 or $11.99.
Over time, regular ad-based plans could bump up to $9.99 and ad-lite could replace Standard at $15/month and ad-free could cost $22.99 and Premium could climb up to $29.99 and so forth, driving everyone down, down, down into the profitable ad-based tiers until streaming becomes just like cable used to be, minus the ability to record programs and fast-forward through commercial breaks (but with the benefit of being able to binge your shows whenever you want, all propped up by more and more and more ads!)
And don’t forget how many commercial breaks they can stuff into a show or movie—especially a movie! With enough tweaking, Netflix can drive everyone into the sweet spot of monthly membership fees and just enough ads for every market. It’s a dystopian future in many ways, I suppose, and this is just one small inconvenience in a sea of depredations. But it all adds up and the water’s getting higher.
