Netflix password-sharing crackdown reportedly lead to 1 million canceled accounts

Netflix’s password-sharing crackdown was never going to be something the public just accepted. A new report, though, claims that the company is already facing a pushback on its attempts to monetize account sharing across locations.

Over the last months, Netflix rolled out Paid Sharing, a new “feature” offering users the ability to pay to add extra households to their accounts. And it’s supposed to come to the US by this summer.

That said, Bloomberg (opens in new tab) cites a report from market research group Kantar that shows this initiative has faced some problems already. Kantar’s claiming that Netflix’s loss of over 1 million users in Spain is tied to the password-sharing crackdown. Dominic Sunnebo, global insight director at Kantar’s Worldpanel Division is quoted as saying “It’s clear this steep drop is due to the crackdown.”

Kantar’s numbers say Netflix cancelations in Spain for Q1 2023 were three times the numbers from Q4 2022. And the password-sharing crackdown is still new to Spain, having arrived in February 2023. Netflix, at the time, offered a €5.99 (around $6.50 USD, depending on the day) rate for each new household.

Netflix, however, doesn’t appear to be bothered. In Netflix’s Q1 2023 letter to shareholders (opens in new tab) (issued on April 18th), the company stated “In Q1, we launched paid sharing in four countries and are pleased with the results. We are planning on a broad rollout, including in the US, in Q2.” 

It’s further stated that it sees cancelations and growth in two consecutive waves, with the report stating “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. As with Latin America, we see a cancel reaction in each market when we announce the news, which impacts near term member growth. But as borrowers start to activate their own accounts and existing members add “extra member” accounts, we see increased acquisition and revenue.”

The report goes on to state that results in Canada, which it believes “is a reliable predictor for the US,” now show a “paid membership base … larger than prior to the launch of paid sharing.” Revenue growth is also up, and “now growing faster than in the US.

Analysis: Is a million just a drop from Netflix’s bucket?

Back in February, when Netflix became more transparent about rolling out Paid Sharing, it tried to frame the issue as one of trying to keep Netflix strong. In a blog post (opens in new tab), director of Product Innovation Chengyi Long claimed that “over 100 million households are sharing accounts,” which was “impacting [its] ability to invest in great new TV and films.”

So, while Netflix is not going to scoff at losing 1 million subscribers, if it sees that as just a stage before success, it doesn’t need to be concerned yet. The streaming juggernaut (which we still believe is one of the best streaming services) had “around 232.5 million paid subscribers worldwide,” in Q1 2023, per Statista (opens in new tab).

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