Netflix lost more than one million subscribers in Spain in the first quarter of 2023, according to market insights group Kantar. The drop comes amid the streaming giant’s crackdown on password sharing, which restricts users from sharing their accounts with those outside of their households without paying an additional fee.
In February, Netflix introduced a paid add-on option in Spain that forced account holders to pay €5.99 ($6.57) per month to grant up to two people outside of their households streaming access. The company began testing such a measure in March 2021. Kantar believes the move is what led to a million subscribers leaving the service, two thirds of whom were said to be sharing passwords with someone else.
While the majority weren’t paying subscribers, the research group still believes the loss can have an impact on word of mouth recommendations for Netflix’s content and service.
Subscription cancellations also tripled in the first quarter compared to the previous period. Among the remaining subscribers in Spain, one-tenth said they plan to unsubscribe in the second quarter.
“We see a cancel reaction in each market when we announce the news,” Netflix said in its first quarter earnings release.
Apart from Spain, Netflix also rolled out the paid add-on option that cracks down on password sharing in Portugal, Canada and New Zealand. The company plans a wider rollout of the option in the coming months, including the US within the second quarter of 2023.
“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,” added Netflix, noting that it expects a temporary dip in subscribers before those who previously didn’t pay start signing up for their own accounts.
Netflix expects to see growth in the second half of 2023 as it broadens the scope of its password sharing crackdown and as more affordable, ad-supported plans become available in new markets.
More than 100 million households in the world share accounts, according to Netflix, which supposedly undermines the company’s ability to invest in more content. The company says it monitors IP addresses, device identifications and account activity to detect accounts engaging in password sharing. – Rappler.com
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