Netflix cost Netflix a million users in Spain to share passwords in the first quarter of 2023, according to a new study by market research group Kantar. This represents a roughly 15% drop in the total number of users.
The streaming platform rolled out the new measures in Spain in early February, demanding a €5.99 monthly fee from users who share their passwords with other households. According to Kantar, this is directly related to the decline in the country’s user base.
Of the 1 million users who unsubscribed from Netflix, two-thirds benefited from password sharing. A third actually paid for the account, resulting in a loss of subscribers that negatively impacted revenue.
At the same time, the study found that subscription cancellations nearly tripled in the first quarter of this year compared to the previous period. Additionally, 10% of the remaining subscribers in Spain plan to cancel their plan in Q2 2023.
Meanwhile, competition is increasing in the country, with Amazon Prime Video accounting for the majority of new subscriptions at 34.4%, followed by the newly launched Sky Showtime at 32.6%.
“Clearly, curbing password sharing has inherent risks, especially when Netflix actively encouraged it in 2017,” said Dominic Sunnebo, global insight director at Kantar’s Worldpanel division. “It was expected that some users would be lost in the process, but the loss of over a million users in just over a month has a major impact on Netflix and whether it decides to continue its action globally.”
Love shares a password.
— Netflix (@netflix) March 10, 2017
In addition to Spain, the streaming platform has so far implemented its new password policy measures in Portugal, Canada and New Zealand after testing them in several Latin American countries. Neftlix estimates that over 100 million households share a password.
“We have people watching Netflix who don’t pay us because they’re basically borrowing someone else’s credentials,” Gregory Peters, the company’s COO and CPO, said during the company’s recent earnings call.
“Our goal this year is to essentially get out of that situation and convert a lot of these people into paid accounts or have the account holder pay for it,” Peters added, noting that this will be “a cancellation response” that was initially expected.
And while Netflix missed its targets for new subscribers in the first quarter of 2023, the company believes the new password policy, combined with cheaper add-based subscriptions, will spur growth in the second half of the year.
It remains to be seen whether the user decline in Spain is just an expected short-term trap, or a clear indication that Netflix’s plan will cost even more subscribers.