Video streaming giant Netflix Inc. (NFLX) lost over one million users in Spain in the first quarter of 2023 according to market research group Kantar, reflecting the effects of the company’s crackdown on password-sharing.
According to the report, in its effort to clamp down on password sharing, Netflix launched its highly anticipated crackdown in Spain in first quarter of 2023, however, this resulted in a loss of over 1 million users of the service.
Netflix had officially started charging from customers who use the account sharing service. In early February, Netflix introduced a €5.99 ($6.57) monthly fee for users in Spain who shared their log-in details with another household.
In an earnings call in January, Netflix co-CEO Greg Peters said the company was expecting to see “a bit of a cancel reaction” to the policy. Netflix also said the company expected the dip to be temporary before “borrowers” started signing up for their own accounts.
However, the current trend shows that the subscribers to return is far from guaranteed. The instant effect is that fewer eyes are on the screen for Netflix, and the company has seen churn almost triple in the quarter compared to the previous period.
Dominic Sunnebo, global insight director at Kantar’s Worldpanel Division comments: “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. 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.”
A similar fee was introduced in Portugal, Canada and New Zealand after a roll-out in several Latin American countries.
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