According to market research group Kantar, Netflix Inc. lost over one million users in Spain in the first quarter of 2023, signalling that the streaming giant’s effort to crack down on password-sharing may have backfired.
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In early February, Netflix introduced a monthly fee of €5.99 ($6.57) for users in Spain who shared their login details with another household, along with technical measures to detect such sharing. Kantar’s research, which is based on surveys of household streaming habits, revealed that the move led to a loss of more than a million users, two-thirds of whom were using someone else’s password.
Dominic Sunnebo, global insight director at Kantar’s Worldpanel Division, said that “it’s clear this steep drop is due to the crackdown,” and that even if most weren’t paid subscribers, the loss of a million users would be a blow to Netflix in terms of word of mouth recommendation for its shows and service. Kantar’s research further revealed that subscription cancellations in the first quarter tripled compared to the previous period, and one-tenth of all remaining Netflix subscribers in Spain planned to unsubscribe in the second quarter.
Although Netflix did not immediately respond to a request for comment, the company introduced a similar fee in Portugal, Canada, and New Zealand after testing it in several Latin American countries. According to Netflix, over 100 million people worldwide use an account they don’t pay for, but the company doesn’t break down this figure by country.
While Netflix missed expectations for new subscribers in the first quarter, the company said that the password-policing plan and a cheaper streaming version with ads would accelerate growth in the second half of 2023. Additionally, the company’s investment in Spanish-language content appears to be paying off, with two of the five most-watched series in Spain during the first quarter of 2023 available to stream on Netflix, according to Kantar. In 2019, Netflix opened its first European production hub in Madrid, which had doubled in size by the end of last year.
The loss of over a million users in Spain is a setback for Netflix, but it remains to be seen whether the company’s crackdown on password-sharing will pay off in the long run. With a growing number of competitors in the streaming space, such as Disney+ and Amazon Prime Video, Netflix will need to continue to innovate and provide a compelling value proposition to retain and attract subscribers.
