Listen to this article Netflix Sees Drop Of 1 Million Spanish Users Due To Password Enforcement
According to Kantar, a market research group, Netflix lost more than one million users in Spain in the first quarter of 2023. This decline is seen as an indication that the streaming giant’s crackdown on password-sharing may have backfired.
In February 2023, Spain was among the first countries where Netflix introduced a monthly fee for users who shared their login details with others. The technical measures were also taken to detect password-sharing. According to Kantar’s research based on surveys of household streaming habits, two-thirds of the more than one million loss in users was due to password-sharing. This move appears to have hurt Netflix in terms of word of mouth recommendations for its shows and service.
Impact on Netflix’s Subscriber Base
The loss of over a million users, even if most were not paid subscribers, would be a significant blow to Netflix. Subscription cancellations in the first quarter tripled compared to the previous period, according to Kantar’s research. Moreover, one-tenth of all remaining Netflix subscribers in Spain stated that they planned to unsubscribe in the second quarter.
Netflix introduced a fee of €5.99 ($6.57) per month for Spanish subscribers who want to add members outside their household. This fee was also rolled out in Portugal, Canada, and New Zealand, after being implemented in several Latin American countries.
“We see a cancel reaction in each market when we announce the news,” said Netflix in its first quarter earnings release on April 18. Netflix expects the dip to be momentary before users who did not pay start signing up for their accounts.
Global Scale of Password-Sharing
According to Netflix, more than 100 million people globally use an account that they do not pay for. However, the company does not break this figure down by country.
Impact on Netflix’s Business Strategy
Last week, Netflix missed expectations for new subscribers in the first quarter. However, the company believes that the password-policing plan and a cheaper streaming version with ads will accelerate growth in the second half of 2023. Netflix’s investment in Spanish language content appears to be paying off. In the first quarter of 2023, two out of the five most-watched series in Spain were available to stream on Netflix. The company opened its first European production hub in Madrid in 2019, a facility that had doubled in size by the end of last year.
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