Netflix Lost 1 Million Users in Spain Amid Password Crackdown, Research Suggests

Netflix’s decision to crack down account-sharing may have caused over 1 million users in Spain to drop the streaming service.

The estimate comes from market research firm Kantar, which conducted recent surveys looking at household streaming habits in Spain, according(Opens in a new window) to Bloomberg. “Interestingly, there is no strong demographic skew to those who canceled, signaling a more outright rejection of the password sharing clampdown,” Kantar wrote in its report(Opens in a new window).

According to Kantar, the cancellations occurred in “a little over a month” during Q1 when Netflix began restricting password-sharing for users in the country, along with other markets such as Canada, New Zealand, and Portugal. “In a worrying sign for the next quarter, 10% of remaining Netflix subscribers say they plan to cancel their plan in Q2 2023, which is well above the average seen in previous quarter,” the report added.

Kantar suggests the loss of over 1 million users might cause Netflix to backpedal on expanding the account-sharing crackdown to more markets, if enough subscribers flee. The streaming giant plans to start restricting password-sharing in the US and other countries sometime during Q2, which ends on June 30.

Netflix didn't provide an official comment on Kantar's findings. But during its most recent earnings report, the company itself acknowledged that some subscribers did cancel in reaction to the crackdown coming to their market in Q1.

That said, the company’s own data shows other subscribers signing up for “paid sharing,” an add-on that can let them continue sharing their account with someone outside their household—so long as they pay a little more. Meanwhile, some former freeloaders began paying for their own Netflix subscriptions, which now include an ad-supported plan, the most affordable tier.

Netflix grew its paid membership base in Canada, despite the account-sharing crackdown in Q1. “Very much like a price increase, we see an initial cancel reaction and then we build out of that,” Netflix Co-CEO Greg Peters said in an earnings call last week.

“We’re pleased with the results of our Q1 launches in Canada, New Zealand, Spain, and Portugal, strengthening our confidence that we have the right approach," Netflix said in a letter to investors(Opens in a new window).

Hence, Kantar’s survey in Spain may not reflect how some users decided to sign up for Netflix’s paid plans, despite the crackdown. In Q1, the streaming giant saw its paid subscriber base grow from 230.7 million to 232.5 million. However, in North America, the company’s user growth has largely been stagnant. Meanwhile, in Latin America, Netflix lost about 450,000 users in Q1.

We reached out to Kantar for details about how the survey was conducted, and will update the story if we hear back.

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