Netflix cuts cheapest ad-free plan in the US; adds almost 6 million paying subscribers amid password cracking

(CNN) — Netflix is ​​dropping its cheapest ad-free plan for new members in the US and UK.

The basic plan, one stream for $10 per month in the US and £7 in the UK, is no longer available to new or newly joined members.

Netflix said existing core members can keep their plans.

The streaming giant’s move is meant to push customers towards its ad-supported “standard with ads” package.

Standard with ads launched in November and costs $7 per month. It includes an average of four minutes of non-skippable commercials per hour.

Netflix dropped the basic plan in Canada last month.

Netflix adds nearly 6 million paying subscribers amid password crackdown

Netflix’s crackdown on password sharing seems to be paying off.

The streaming giant on Wednesday said it had added nearly six million paid subscribers in the three months ending June, bringing the total to more than 238 million worldwide.

The company said it has now launched a paid exchange – its attempt to get users to stop sharing accounts with others for free – in more than 100 countries after starting its wide rollout earlier this year. Netflix stated that revenue in these regions is now higher than before the service’s launch and that “registrations are already exceeding cancellations.”

The results come at a defining moment for Netflix, as the streamer looks to increase revenue by limiting password sharing and introducing an ad-supported subscription option, as well as grappling with a new challenge: strikes from Hollywood actors’ and writers’ unions that could impact its future slate of original shows and films.

While Netflix’s changes helped boost revenue for the quarter, they still fell short of Wall Street analysts’ expectations. Netflix’s revenue for the quarter was nearly $8.19 billion, compared to Wall Street’s forecast of $8.3 billion. The company also reported net income of $1.49 billion, up 3% from the same period last year.

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“While we have made steady progress this year, we still have a long way to go to accelerate our growth,” the company said in a letter to investors about the results. The company noted that subscriptions to its low-cost, ad-supported plan have doubled compared to the first three months of this year, but “current ad revenue is not significant for Netflix.”

Shares of Netflix (NFLX) fell more than 4% after the close of trading on Wednesday following the release of the results.

Netflix said it expects to generate $8.5 billion in revenue in the current quarter, up 7% from last year but below analysts’ expectations of nearly $8.7 billion. The company added that it expects paid net receipts in the September quarter to be similar to those in the June quarter.

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