Earlier this year, Netflix started cracking down on password sharing in Spain. Anyone sharing their Netflix account must pay a €5.99 ($6.57) fee per month to continue sharing. According to market research group Kantar, this has resulted in the loss of over one million users in Spain, about a third of which were paid subscribers to the service.
Netflix’s password-sharing crackdown ramps up
Kantar’s research reveals that churn nearly tripled quarter-over-quarter after Netflix eliminated password sharing in Spain. About half of the subscribers that canceled their subscriptions say they won’t pay for Netflix going forward, either.
Kantar also notes that there aren’t any clear demographic patterns when it comes to the users in Spain who are dumping the streaming service. This suggests everyone is equally frustrated about the prospect of paying extra to share their accounts. Additionally, 10% of the remaining Netflix subscribers in Spain claim they are planning to cancel in the second quarter of 2023, which Kantar says is much higher than the typical average.
“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,” Dominic Sunnebo, global insight director at Kantar’s Worldpanel Division. “Some users were expected to be lost in the process but losing over 1 million users in a little over a month has major implications for Netflix and whether it decides to continue with its crackdown globally. Monitoring the next few quarters to see how many of these consumers decide to re-subscribe will be vital to Netflix strategy in this space.”
As Bloomberg notes, Netflix is not especially worried about the spike in cancellations. In an earnings call on April 18, the company noted that there is a “cancel reaction in each market when we announce the news.” For example, in Canada, Netflix says its paid membership base is now higher than it was prior to launching the paid sharing feature.
Netflix plans to bring its password-sharing crackdown to the US by the end of June.