The strategy of restricting shared accounts is a blow to Netflix in Spain. The company has lost a million users in the first quarter, according to a Kantar analysis published on Wednesday. Although the cheapest options with advertising had entered the market on the right foot, the greater control in the use of accounts has tipped the balance for the worse, with an “immediate” drop.
At the beginning of February, Netflix introduced a monthly fee of 5.99 euros for users in Spain who share their login details with another household and technical measures to detect such sharing. Kantar rightly attributes the loss of a million users to this, since two-thirds used someone else’s password. The data is based on surveys on household streaming habits. “Netflix’s strong hand against the sharing of passwords causes an immediate drop in subscribers,” point out Dominic Sunnebo and Mayte González, responsible for the analysis. “The loss of some users was to be expected, but losing more than 1 million subscribers in just over a month has major consequences,” it warns.
The fall is part of a general decline, since 292,000 households have stopped accessing streaming services this quarter. In total there are 11.9 million, 64%. But in the case of Netflix, the decline is more notable. The platform nearly tripled its churn rate in the quarter compared to the prior period.
Although the output of a million users is not in its total number of paying customers -some did not pay when sharing- it is a serious blow to Netflix in terms of reach and word-of-mouth recommendation. Thus, Amazon, Sky Showtime -which is entering the market with force- and HBO overtake it in terms of new subscribers in the first quarter. Netflix captures 7 out of every 100 new subscribers, compared to 35 for Amazon or 33 for Sky Showtime.
The worst may be yet to come. Of the remaining Netflix subscribers in Spain, one tenth plan to unsubscribe in the second quarter. This is because you normally have a subscription to a platform and it changes depending on the catalog and prices. The most watched series in these months is The last of us, available on HBO. Netflix does have the second most viewed, The Snow Girl. “The projections for the next quarter are worrying,” says Kantar.
Globally, more than 100 million people use an account they don’t pay for, according to Netflix. The company does not break this figure down by country. The turn in his strategy contrasts with that of five years ago, when he encouraged sharing accounts. “The loss of some users was to be expected, but losing more than 1 million subscribers in just over a month has major consequences for Netflix and will influence its decision to continue with its measure globally,” the analysts say. Hence, seeing the evolution in the coming months is crucial to define what to do.
The positive note is that the investment in Spanish content seems to be paying off. Two of the five most watched series in Spain were on Netflix, according to Kantar: La chica de nieve and EntrevÃas. The company opened its first European production center in Madrid in 2019, a facility that had doubled in size by the end of last year. “The success of Spanish titles suggests that Spanish content could compete with Hollywood in the Spanish market,” it stands out.
Last week, filing accounts, Netflix missed expectations for new subscribers in the first quarter, but said the password control plan and a cheaper subscription with ads will accelerate growth in the second half of the year.
