Netflix’s password sharing crackdown has cost it one million users in Spain during the first quarter of 2023, a new study by market research group Kantar has found. This translates to an approximately 15% decrease of its total users.
The streaming platform introduced the new measures in Spain in early February, asking for a €5.99 monthly fee from users sharing their passwords with other households. According to Kantar, this is directly linked to the decline of the country’s user base.
Out of the one million users who opted out of Netflix, two-thirds were benefiting from password sharing. One-third were actually paying for the account, meaning a loss in subscribers which results in a negative impact on revenue.
At the same time, the study found that subscription cancellations nearly tripled in this year’s first quarter compared to the previous period. Furthermore, 10% of Spain’s remaining subscribers plan to cancel their plan in the second quarter of 2023.
Meanwhile, competition in the country is increasing with Amazon Prime Video accounting for the majority of new subscriptions at 34.4%, followed by the newly-launched Sky Showtime at 32.6%.
“There are of course inherent risks with clamping down on password sharing, particularly when back in 2017 Netflix was seen to be actively encouraging it,” said Dominic Sunnebo, Global Insight Director at Kantar’s Worldpanel Division. “Some users were expected to be lost in the process, but losing over one million users in a little over a month has major implications for Netflix and whether it decides to continue with its crackdown globally.”
Love is sharing a password.
— Netflix (@netflix) March 10, 2017
Alongside Spain, the streaming platform has so far implemented its new password policy measures in Portugal, Canada, and New Zealand, following testing in several countries in Latin America. According to Neftlix’s estimates over a 100 million households are sharing a password.
“We’ve got folks that are watching Netflix who aren’t paying us as part of basically borrowing somebody else’s credentials,” Gregory Peters, the company’s COO and CPO, said during the latest earnings call.
“Our goal is over this year to basically work through that situation and convert many of those folks to be paid accounts, or to have the account owner pay for them,” Peters added, noting that “a cancel reaction” to that is to be expected in the beginning.
And while Netflix has fallen off its targets for new subscribers in the first quarter of 2023, the company believes that the new password policy in combination with cheaper add-based subscriptions will boost growth in the second half of the year.
It remains to be seen whether Spain’s user decline is just an anticipated short-term pitfall, or a clear indication that Netflix’s plan will cost it even more subscribers.