Netflix has officially eliminated its most affordable subscription plan devoid of advertisements in both the U.S. and the U.K. This strategic move is aimed at boosting sign-ups for its recently launched ad-supported subscription, which is reshaping the streaming landscape.

According to information found on Netflix’s pricing and plans page, which outlines all available options for customers, the previous basic plan—priced at $9.99 and free from advertisements—has been phased out for new or returning subscribers. However, existing subscribers on this plan will continue to enjoy their service unless they opt to change plans or cancel their subscriptions, ensuring a smooth transition for loyal customers.

This shift paves the way for Netflix’s “standard with ads” plan, now the most affordable option available at a price of $6.99 per month. This ad-supported model represents a significant development in Netflix’s pricing strategy, catering to a broader audience looking for budget-friendly streaming alternatives.

During the earnings call for the last quarter, Netflix’s CFO, Spencer Neumann, emphasized that the financial viability or “economics” of their ad-supported plan exceeded that of the previous basic plan. “It’s actually even higher than our standard plan,” Neumann articulated during the call, noting that advertising is a vital component for enhancing both revenue and profitability in the competitive streaming market.

Former Netflix co-CEO Reed Hastings acknowledged late last year that his hesitancy in embracing advertising on the platform stemmed from a strong focus on competing with digital giants. Shortly afterward, co-CEO Ted Sarandos indicated during an investor seminar that Netflix is likely to introduce various ad-supported pricing tiers in the future, which could attract an even wider audience.

The ad-free basic and premium plans now cost $15.49 and $19.99 per month, respectively. These pricing options reflect Netflix’s ongoing efforts to offer various subscription models that cater to different viewer preferences and maximize its market reach.

Like many other media companies, Netflix is actively seeking to enhance its streaming revenue, positioning advertising as a crucial strategy to achieve that goal. This approach mirrors industry trends, where ad-supported models are increasingly being adopted to boost profitability and subscriber growth.

<pSimilarly, Disney's CEO Bob Iger has stated that the company is leaning into its ad-supported streaming option as a pathway to profitability, highlighting a significant shift in the industry towards integrating ads into subscription models.

Netflix introduced the advertisement-supported pricing tier late last year, following its crackdown on password sharing. This strategy was implemented after Netflix observed stagnation in subscriber growth, prompting the company to explore alternative avenues for revenue enhancement.

In May, Netflix announced to advertisers that it had gained 5 million monthly active users for its ad-supported tier, revealing that 25% of new customers are opting for this plan wherever it is available, indicating a positive reception and potential for growth in this segment.

As Netflix prepares to report earnings after the market closes on Wednesday, investors will closely monitor how the new sharing policy and ad-supported plan have influenced subscriber growth and overall financial performance, providing crucial insights into the platform’s ongoing evolution in the competitive streaming industry.