Netflix, the global streaming giant, has announced a significant change to its subscription offerings in Brazil. As of the end of October, the Basic plan will be discontinued in the country, leaving Brazilian viewers with a choice of ad-supported plans only. This announcement was made during the company’s fiscal results presentation for the last quarter, held on Wednesday, October 18. The move is part of Netflix’s strategy to drive subscriptions in its ad-supported plan.
The Basic plan, which is being phased out, was priced at R$ 25.90 per month and provided support for a single screen with content in HD quality. With its removal, the most affordable ad-free plan available in Brazil is the Standard plan, which costs R$ 39.90.
In addition to Brazil, other countries, including Germany, Spain, Japan, Mexico, and Australia, will also have one less subscription option available.
For the time being, this change will only affect new subscribers and those renewing their subscriptions. Existing users will not be impacted immediately, although it is likely that the migration will occur in the near future. Furthermore, Netflix announced that the Standard plan with Ads will soon offer the ability to download content, although no specific date for this feature’s release has been provided.
The discontinuation of the Basic plan follows a series of price adjustments made by Netflix in various regions. In the same fiscal report, the company confirmed price increases for its subscription services in the United States, the United Kingdom, and France. However, Netflix has decided not to adjust prices for its Brazilian subscribers at this time.
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Why the End of the Basic Plan?
The primary objective behind Netflix’s decision to discontinue the Basic plan is to drive user adoption of the Standard plan with ads, priced at R$ 18.90 per month. This ad-supported plan has become a crucial revenue generator for the company. In essence, the goal is to encourage more users to subscribe to this plan, thereby attracting a greater number of advertisers.
Although the revenue from subscriptions may decrease slightly due to the lower cost of this plan, any deficit is expected to be offset by increased advertising revenue. With a larger user base, Netflix can negotiate advertising deals with more companies and command higher rates for advertising space on its platform.
In its fiscal report released on October 18, Netflix emphasized the growth of ad-supported subscriptions as one of its top priorities. According to the streaming platform, in the third quarter of 2023, ad-supported subscriptions saw nearly a 70% growth compared to the previous period. As a result, this subscription model now accounts for approximately 30% of all new users in the 12 countries where this option is available.
Netflix’s strategic shift towards ad-supported plans is expected to reshape the streaming landscape in Brazil and other countries, as the company aims to balance its revenue streams and enhance its value proposition for both users and advertisers.
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