According to a report by Kantar, a market research group, Netflix has lost over a million subscribers in Spain in the first quarter of 2023. This loss has been attributed to Netflix’s efforts to tackle password-sharing. Kantar’s research shows that two-thirds of the users who canceled their Netflix subscription used someone else’s login details. The study was conducted through household streaming habit surveys. Netflix introduced a monthly fee in Spain in early February to deter users from sharing their login details with others. It implemented technical measures to detect such sharing, making it one of the first markets.
Kantar’s Worldpanel Division’s global insight director, Dominic Sunnebo, said that the recent drop in Netflix’s user base in Spain is directly linked to the company’s efforts to combat password-sharing. The loss of over a million users, regardless of whether they were paying subscribers or not, will negatively impact Netflix’s reputation and word-of-mouth recommendations. Kantar’s research shows that cancellations during the first quarter have tripled compared to the previous quarter. In addition, one out of every ten remaining subscribers in Spain plans to cancel their subscription during the second quarter.
Netflix’s plan to address password sharing and cheaper streaming version with ads to boost growth in 2023
In Spain, subscribers are charged €5.99 ($6.57) per month to add members outside their household after Netflix introduced a similar fee in Portugal, Canada, and New Zealand, following its implementation in several Latin American countries. According to Netflix’s first-quarter earnings report released on April 18, the company observed a pattern of cancellations in each market when the news of the additional fee was announced. However, Netflix expects the dip to be temporary as non-paying users begin to sign up for their accounts.
Netflix said that “in Canada, which we believe is a reliable predictor for the US, our paid membership base is now larger than prior to the launch of paid sharing, and revenue growth has accelerated and is now growing faster than in the US.”
Netflix has stated that over 100 million people globally use an account they don’t pay for, although the company has not provided a country-wise breakdown of this figure. Last week, the company reported falling short of expectations for new subscribers during the first quarter. However, Netflix has expressed confidence that the password-policing plan and introducing a cheaper streaming version with ads will drive growth in the second half of 2023.
Netflix’s investment in Spanish-language content is paying off. The company opened its first European production hub in Madrid in 2019, a facility that had doubled by the end of last year. In the first three months of 2023, two of the five most-watched series in Spain were available to stream on Netflix, according to Kantar.
The strategy of Netflix for addressing subscriber growth, investing in Spanish language content
The crackdown on password-sharing is familiar to Netflix. While many people share their passwords with family and friends, it is against Netflix’s terms of service. The company has been trying to find a way to stop the practice for years. However, the course has been difficult to police, and the company has hesitated to alienate its customers by aggressively enforcing its terms of service.
Overall, the results of Netflix’s move to crack down on password-sharing remain to be seen. While the loss of a million users in Spain is significant, it is still being determined how many of those users were paid subscribers or how many will return to the service. Additionally, it is still being determined how successful Netflix’s password-policing plan will be in other countries.
Last week, Netflix did not meet the expected number of new subscribers in the first quarter. However, the company remains optimistic that its plan to monitor password usage and its upcoming cheaper streaming version with ads will help drive growth in the second half of 2023.
According to Kantar, Netflix’s investment in Spanish language content is paying off, as two of the top five most-watched series in Spain in the first three months of 2023 were available to stream on Netflix. In 2019, the company established its first European production hub in Madrid, which has since doubled in size by the end of last year.