Netflix reports the money is rolling in and so are advertisements for Canadian subscribers

Netflix told investors it has added millions of new customers and has lots of room to grow its revenue with part of that growth coming from the planned elimination ofthe cheapest, ad-free plan available to Canadians.

According to fourth quarter results, released late Tuesday afternoon, Netflix is planning to "retire" what it refers to as its Basicplan in Canada and the United Kingdom starting in April 2024.

The Basic, zero-ad plancost $9.99 per month, a price that existing customers of that plan could continue to pay as long as they did not change their account.

New subscribers, as well as existing Netflix subscribers who wanted to switch plans, have been unable to choosethat plan since June 2023.

Netflix would not confirm the exact date that existing customers will be cut off. It referred CBC Newsto a letter published forinvestors as part of the company's quarterly results, which says the action will start during its second quarter.

Back in June 2023 when Netflix announced it was cutting off the cheapest ad-free plan to new clients,the company toldThe Canadian Press that existing customers would eventually be cut off from the Basic plan.

Those subscribers will choose between a cheaper, $5.99 per month plan that includes advertisements, or one of its an advertisement-free plans, which startat$16.49 monthly.

Revenue is up.So are advertisements

News about the plan'sdemise came as part of the company's year-end announcement that its revenuein the last three months of 2023 was up by 12 per cent compared to the year before.

Investors were also told that plans featuring advertisements now account for 40 per cent of all Netflix sign-ups in markets that offer the advertisement-included plans. The company also said it plans to improve how it targets ads to viewers.

These investor announcements come as competitor Amazon Prime Video is set to roll out mandatory advertisements on its streaming platform. Canadian viewers will have topay an extra $2.99 per month if they want to opt out of ads on that service.

Investors seem to like what they see

Netflix's stock price rose on Wednesday asitssubscriber growth appeared to cementinvestor confidence thefirm has won the streaming wars with its crackdowns onpassword-sharingand a strong content slate.

The company said on Tuesday that 13.1 million people signed up for itsservice in the fourth quarter, marking its best growth since thestart of the pandemic and handily beating estimates of 8.97million subscribers.

"Netflix has already won the streaming wars and this type ofstrong result ...especially relative to its streamingpeers, is what winning looks like," said Pivotal Research Groupanalyst Jeffrey Wlodarczak, who raised his estimated target for Netflix's stock price.

WATCH |Consumerswarned to get used to paying more for streaming:

Streamers warned to get used to paying more

1 year ago

Duration 1:45

Streaming industry watchers warn that the days of low streaming bills are over as more services, like Netflix and Disney+, make moves to increase profitability.

The company's stock commands a premium relative to rivals, and some analysts believe the higher valuation could be justified asthe ongoing push for profitability at other streaming firms willforce them to license more titles to Netflix, which may helpNetflix drive up subscriber growth and average revenue per user.

The firm highlighted strong demand for licensed titles suchas Young Sheldonin its earnings call on Tuesday. Its slate ofshows in the fourth quarter also included the final season ofthe The Crownand David Fincher's film The Killer

The company plans to spend as much as $17 billion US on contentthis year, after last year's dual Hollywood strikes by actorsand writers disrupted some productions.

Netflix is also ramping up its bets on live programming andunveiled a more than $5 billion US rights deal on Tuesday to bringWorld Wrestling Entertainment's Rawand some other programmingexclusively to its service in January 2025.