A market research group Kantar revealed that Netflix lost more than 1 million subscribers in Spain alone after their crackdown on password sharing. Prior to the indefinite suspension, Netflix subscriptions allowed users to share their passwords with their neighbors and even those living in other countries.
However, in early February, the streaming platform introduced a policy that mandated their users to pay if they wanted to share their passwords with other people. Within the first three months of 2023, the streaming company lost an estimated 1 million users alone in Spain. They are also reports of similar losses in other Latin countries.
What Happened?
The major reason for the reduction in Netflix subscribers was a new policy they introduced when 2023 began. They said those interested in sharing their password with others had to pay for that. The change in plans came with a €5.99 ($6.57) monthly fee, and Netflix could now monitor the location of those shared accounts.
"We’ve always made it easy for people who live together to share their Netflix account with features like profiles and multiple streams. While these have been hugely popular, they’ve also created confusion about when and how you can share Netflix. Today, over 100 million households are sharing accounts — impacting our ability to invest in great new TV and films," Netflix announced in February.
Spain and some other countries were the first to get hit as Netflix now made it compulsory to pay a fee if they must share passwords with other accounts." So over the last year, we’ve been exploring different approaches to address this issue in Latin America, and we’re now ready to roll them out more broadly in the coming months, starting today in Canada, New Zealand, Portugal and Spain. Our focus has been on giving members greater control over who can access their account," Netflix noted.
Netflix subscription now came with a primary location that allowed those within the household to use the account. With this, Netflix password sharing is now limited to 2 people only. And before these two people have access, users have to pay for the sub-account. But this brought a huge controversy for Netflix as they saw their user base drop in numbers. Particularly from Spain, over 1 million people using Netflix password sharing have deleted their accounts.
What's Next for Netflix?
While there's a wide report of a drop in user base, Netflix said they are seeing some positive signs from Canada. Although their user base has also dropped drastically over there, they are recording more subscriptions.
According to Netflix's earnings report on April 18th, they are seeing some cancel reactions in the market, but their earnings have increased in Canada. They reported that although there are negative effects in Spain and the US, their earnings haven't been affected that much.
"We see a cancel reaction in each market when we announce the news. 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," Netflix noted. Netflix hopes that both in Spain and other parts of the world, the situation regarding subscriptions will improve.