Changes are afoot at Netflix. Against conventional logic, the streamer’s password crackdown is working as a means to make extra money for the platform. So now it’s time for another experiment. Happily, the experiment is confined to Canada for the moment. But if it catches on…
The Winnipeg Free Press, a Canadian publication, reports that Netflix is phasing out its Basic Tier in the country, replacing it with that lovely little Basic with Ads option. Basic with Ads recently underwent a slight upgrade, perhaps for just such an occasion.
A taste of things to come
Netflix Canada has removed the option for new user accounts to select the Basic price tier, jumping from Basic With Ads right up to the Standard option. Basic with Ads, costs CAD$6/m (R85/m), while the Basic tier costs CAD$10/m (R140/m). You’d think that Netflix might lose money here but that’s probably not the case.
The company’s line of thinking is obvious, with a little thought. Subscribers on the Basic Package (which costs R100/m here in South Africa at present) only make Netflix a hundred bucks per user account per month. There are two ways to increase that monthly sum. One is to convince folks that sharing passwords is bad and that they have to pay. The other is to increase revenue while charging users less.
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Which is exactly what this Canadian experiment is testing out. Either users will opt for the pricier Standard monthly tier, or they’ll stick with the cheaper Basic with Ads option. In that case, Netflix makes less money per user, but it does derive (probably more) income from the ads its shows to those users. In the event that this turns into the money-spinner the streaming giant obviously hopes it will be, we can expect that the Basic tier will disappear in even more markets around the world.