Netflix Loses A Million Subscribers In Spain After Greedy Password Sharing Crackdown
from the from-innovative-disruptor-to-ordinary-bore dept
We’ve noted repeatedly how Netflix’s password sharing crackdown is a stupid cash grab that alienates and annoys loyal customers, duplicates existing efforts to restrict “freeloaders,” won’t give the company the financial windfall it thinks, and just generally represents how the company has inevitably shifted from innovative disruptor to the kind of tone deaf cable giants it used to criticize.
The plan basically involves charging users an extra $2-$3 a month if it’s found that someone is using your account outside of your home. The problem: Netflix has already been imposing blanket price hikes, and it already limits the number of simultaneously streams per account, forcing users to subscribe to more expensive tiers if they want to expand the limit.
While the crackdown isn’t expected to hit U.S. subscribers until the end of the second quarter (aka soon), the effort has generally been a hot mess in the smaller countries Netflix first used as guinea pigs to test both the underlying tech and company messaging.
The company had to suspend the efforts in countries like Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic, after users were equal parts befuddled and annoyed. And in Spain, estimates are that the company saw a defection of more than one million subscribers largely due to the higher, unnecessary fees:
“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.
Interestingly, there is no strong demographic skew to those who cancelled, signaling a more outright rejection of the password sharing clampdown. 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 quarters.”
It’s just blanketly stupid to impose annoying and costly new restrictions at a time when streaming competition has become more heated than ever. Netflix’s competitors can now simply gain a competitive advantage by being less confusing and annoying on pricing and account restrictions.
I don’t expect it to be fatal, but it sure as hell won’t help the company maintain leadership in an increasingly competitive and crowded field. Meanwhile, some analysts say Netflix’s predictions that it will be a boon for revenues simply aren’t based in reality:
Benchmark Co. analyst Matthew Harrigan, in a note last week, expressed skepticism that it would be a “growth game-changer,” opining that the strategy “cannibalizes full-ride member growth.” He pegged the incremental revenue lift at less than 4% revenue, even with generous assumptions about how many piggybackers Netflix might be able to convert to Extra Member accounts.
But it’s also just another example of Netflix’s pivot from disruptive innovative to just another powerful corporation primarily interested in nickel-and-diming its existing customer base in a bid to please Wall Street’s insatiable need for improved quarterly returns at any cost. It doesn’t matter to many myopic investors if you’re sabotaging longer term product quality and company reputation.
This inevitable pivot was first made fairly obvious when the company began waffling on issues like net neutrality in 2018, and is all the more evident now. Much like big cable companies like Charter, Netflix — a company that spent years openly advocating for password sharing — now wants to pretend password sharing is some unethical financial nightmare, when that’s simply never been the case.
Filed Under: cable tv, competition, password sharing, streaming, tv, video
Companies: netflix
Comments on “Netflix Loses A Million Subscribers In Spain After Greedy Password Sharing Crackdown”
Somewhere in a board room there is a group of old men screaming about how could this happen and why did no one warn them this could happen.
Like very long distance lorry driver with a subscription, or commercial air crew, who could change country country every day. Such people may also rely on a VPN to follow a series etc.
It was honestly inevitable that this day would come. There is only so much subscriber growth a service can achieve before it plateaus, at which point the only option is to nickel and dime existing customers. It is one of the flaws in the subscription business model, hence all the price hikes and crackdowns on customer behaviour we’ve been seeing recently.
Given subscription fatigue is very real and that people need to cut expediture due to the cost of living, I suspect this is only the beginning and it will affect not just Netflix.
Personally, I have culled all standalone video subscriptions that I had. Now I only have Prime Video because it is bundled with Amazon Prime and Apple TV+ because it is bundled with Apple One. Netflix and Disney+ were both cancelled to save money.
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To be fair a Disney+ with hulu bundle saved me a ton of money, and almost isnt ever not on in my home.
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**Saved me a ton of money over a Cable package.
Re: Re: and almost isnt ever not on in my home.
Can I get some ranch dressing on that word salad plz?
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Due to my nuerodivergent roommate, Disney+ or Hulu is almost always running in the background with a content selection that dwarfs my ripped digital media collection, often in better quality.
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“To be fair a Disney+ with hulu bundle saved me a ton of money”
In Spain, Hulu doesn’t exist, and Disney+ includes a channel named Star, which includes most of what is on Hulu in the US but for almost no extra cost.
(I say almost because while, say, Prey was on there day one, there’s still nowhere to get the new Hellraiser legally).
But, most things on Hulu in the US are just on Disney+ in Spain.
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“at which point the only option is to nickel and dime existing customers”
Why?
Is it because the business model relies upon a continuous stream of new subscribers in order to be profitable?
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The problem is shareholders. If the business wasn’t paying them massive dividends it wouldn’t need to do this.
Re: Re: Re: Netflix doesn't pay dividends
But shareholders do expect the stock price to rise. It fell off a cliff last year and never recovered. It was grossly overinflated so it’s never going to recover.
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It’s because of the mindset in the stock market that your company needs to show growth. It’s not enough to just have a profit. That profit needs to be better than the prior term, and next term’s profit needs to be higher than this term and so on.
The mindset is dangerous because there will always be a point that growth cannot happen.
Re: Re: Profits, the almighty king
No, it’s because of Wall St., which is overrun to the point of exhaustion with so-called 90-day wonders. In case you don’t know the term, it means that MBA’s with sawdust for brains think that the only measure of a businesses’ worth is how they perform over the shortest possible period, or 90 days. To be brief, they think that if your company doesn’t make a profit over the last quarter, then your company sucks, and should be shit-canned. Tbhat’s what we mean by Wall St., and 90-day wonder(s).
It used to be that a company could successfully “coast” with a very minor profit quarter over quarter, and year over year. But in the last two decades, and possibly longer, Wall St. has been on a tear, driving our economy into the ground in the name of The Almighty Dollar, and it’s close cousin, The Profit.
And it shows in so many ways. For this discussion, Netflix had become conflicted between its history of outstanding customer relations and Wall St.’s insane desire to make more money than Croesus and Midas combined. In just 90 days. As an old man, I can remember when I used to make X dollars a year, and now the average Joe Six-pack makes that in less than a week. That’s inflation taken to the extreme, and I don’t see it settling down any time soon. Or as some wags put it, it’s all a numbers game, and he who wins is the one with the largest number(s). Bah! Humbug!
(Sorry for the rant, but my trigger is hair sensitive on this particular topic.)
perhaps the anti-password sharing campaign is more about fairness than profits
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That is no more true now than it was in 2017.
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A publicly traded company with shareholders to please and appease making a decision that isn’t based on profit?
LOL, good one!
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Who is password sharing unfair to?
Re: Re: Who is password sharing unfair to?
Shareholders?
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People who don’t understand how culture is shared and consumed.
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Yeah, that’s Netflix, all right, a company that famously cares more about fairness than profits.
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is the punchline to this joke supposed to be the absurdity of this suggestion or the out-of-touch character that would earnestly propose it?
For every viewing, netflix already pays for that one time use licence per viewing. So if you view the same piece of content numerous times, netflix pays for each view to the copyright holders. So if you watch the same thing a few times, you must be sharing your account.
This is not the fault of the consumer, and only a little bit of the fault of netflix. This is the fault of an insatiably greedy industry that provides nothing to society (read: copyright) but demand their pound of flesh. They dont care where it comes from, as long as its consistent. They dont care about if its sustainable, and they’ll be as harsh as possible to meet their quarterly revenue projections. Therefore, netflix feels it has to clamp down. But it hurts them, and no-one will use them, so everyone upstream hurts.
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… or have a 3 year old.
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Alternately, you may have someone in the household with a hyperfixation on that show/movie. This becomes far more likely when said household member has ADHD and/or is on the Autism Spectrum.
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Or it may be your favorite music concert.
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” So if you watch the same thing a few times, you must be sharing your account.”
That’s some rather fine capitalistic bullshit right there.
Re: Re: Could it be?
One has to wonder….
If Netflix is truly paying copyright holders per viewing, then what’s preventing them from ‘under reporting’ those numbers? History. Hollywood accounting mandates that income will increase, period. By Netflix reporting that they are suffering subscribers defections, that number of views being reported back to Hollywood should be commensurately lower, right?
It’s only fitting that Hollywood-accounting be turned back on Hollywood.
But a financial nightmare password sharing is!
It is a nightmare. It’s just that letting your daylight decisions be governed by your nightmares’ fearsomeness is not likely to optimize your returns of investment.
Entrepreneurship and investing is exactly about immersing yourself into stuff that has the potential to wake you up in sweat at night, but doing so while hedging your bets and keeping the ongoing expense sheets close to your chest.
Companies that make it out of startup will garner more conservative accounting and rules in the process, with more of a focus on longterm sustainability. That is a problem if a fundamental part of the attraction to partners, customers, and investors had been based on an initial disregard for maximising returns.
Retaining the intelligence for keeping expensive focusing points of attraction operative can be a problem when going public or otherwise placing the financing under more conventional management.
Sometimes you have to embrace at least one nightmare and own it in order to differentiate your offerings from that of others.
They lost me about ten years ago when they charged me for a DVD that I’d returned to them, without bothering to let me know they were doing so…on Christmas Day…overdrawing my account. It took me two weeks to get my money back, but the overdraft fee was mine to keep, thus effectively negating the refund I had to chisel out of them. People/corporations can steal from me ONCE. After that, they lose access to my money. Never let the same dog bite you twice. There is always another option.
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Netflix had direct access to make arbitrary withdrawals from your bank account before that? I wasn’t even aware they could be paid that way, or that reputable banks would allow it. I think it’s a rule in many countries that account holders must be given specific advance notice of withdrawals, and can arbitrarily block/reverse them. But in my experience, this is for stuff like rent and utility bills, not internet-based services—those almost invariably want credit cards or gift cards.
So, how's that income looking there Netflix?
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.
Losing a million users is certainly going to hurt immediately but it sounds like they’ve got much bigger concerns to worry about long-term…
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 quarters.”
… when your latest business decision has you slated to lose a tenth of your current customer base in the area on top of the million you already lost that’s probably a good sign that you really screwed up and should re-evaluate whatever you just did.
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The problem is simply why people joined. At one point, Netflix were the only major streaming service. Then, mainstream studios left, they produced content that appealed to different markets, but they lost content.
If you want to watch X blockbuster or Y TV series, it’s possible Netflix isn’t for you when they lose the rights to that. It’s not Netflix’s fault, it’s just that when someone decided they wanted all the revenue, they couldn’t offer it any longer. Netflix still has a lot of value, but if 10% decide to go because they don’t have The Simpsons or Friends any more, that’s not a commentary on Netflix’s overall value. It just means other people with veto power followed.
Oh dear, it’s happened again. I am shocked and bewildered that technical innovation has been followed by corporate exploitation. But I’m sure the next company to do something slightly novel that everyone trips over their dicks to lavish with unjustifiable praise will be the one to lead us all into the promised technotopia.
It’s just simpler to sail the high seas.
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“First: sail!” doctrine?
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Only if you wear period-appropriate gear!
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Just a pad should be fine, then
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If you don’t look like Guybrush Threepwood at a bare minimum…
Well, maybe they could, but a lot of them (HBO Max, Disney+, Paramount+, Hulu, Peacock) are subsidiaries or close affiliates of MPAA members; and the rest depend on licensing deals with members.
I doubt it’s a coincidence that Netflix changed their tune around 2019, the same year they joined. And I suspect they know what they’re doing; that playing fast and loose with the rules was always a temporary growth strategy till people got hooked. Now that they have a seat at the table, Netflix can convince the cartel to enforce similarly onerous restrictions on their competitors.
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“MPAA members”
While true, this is Spain, and the rights to distribute aren’t necessarily the same.
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What’s that got to do with it? Netflix is an American company and MPA(A) member, probably making all these decisions in the USA. If they want to provide poorer service to their customers, is Spain gonna stop them? Do you mean to suggest there’s an antitrust angle, mandatory licensing to competitors, or something like that?
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I missed this reply previously, but the answer is simple.
Many movies are financed by selling distribution rights before it’s made, often by negotiating different deals for different regions. There’s many titles that are on one streaming service in North America but another in Europe, for example, or different in Spain compared to France.
The people who own a particular title might not be an MPAA member, or even have any ties to the US. The nationality of Netflix makes zero difference – they still have to negotiate with the owner of the content and quite often that will happen from a local office not the US office.
Netflix are free to be idiots if they want, but that has not necessarily got anything to do with the MPAA or the fact that they’re American.
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hello
Huh… I’ve not had any problems, even though I do share my account with an ex girlfriend in return for her paying for my YouTube Premium. As in, I’ve never even had a request to do something. Maybe it’s because I tied it with my Movistar+ account, but that does seem bad if those are accurate figures…
Anecdotally, I know more people who view locally produced Netflix shows like The Snow Girl and ShKy High than have left, but I can imagine some leaving for free trials elsewhere then returning to see other things. The article says HBO and Sky, which have been heavily promoting free trials.
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Not sure where you’re located, but Netflix has not yet begun trying to annoy their US customers into signing up.
Quelle surprise.
Why do people share (or “share”) passwords? Because they aren’t using all the concurrent streams they paid for.
Why aren’t they using all the streams they paid for? Because their kids are at school, or a new apartment, and maybe they never could manage to watch all those streams at once, and no one is watching 24-7.
And – maybe, just maybe – on top of that, overall they are watching less Netflix, because the Netflix catalogue just keeps getting worse all the time, and no one would pay for more than a month or two if they didn’t feel they were getting at least some value by sharing the damn password.
Have fun “maximizing”, Netflix.
Nevermind "sharing", how about allowing me to use my account whereever?
As I understand these new “sharing” rules, I can’t even “share” with myself… For example, I cannot watch Netflix on my home TV and later on my office TV (or my vacation home TV)…
The rules are oriented towards “locations”, “homes” — whereas I’m just one guy that may have a few TV’s in different locations… I can’t even use MY account in a few locations. If I can’t, I will cancel…
users, not subscribers
Netflix lost 1 million users, not 1 million subscribers, in Spain.
https://www.techhive.com/article/1801332/netflix-password-sharing-crackdown-spain.html
Netflix lost some number (not 1 million) actual subscribers and presumably gained some number of new subscribers who used to be non-paid users so who knows whether they gained or lost on balance.
Anyway Spain is small potatoes, the big test will be when they crack down on password sharing in the US. This is dangerous for Netflix because their North American market is the highest value one. Subscribers pay an average of $15/month, compared with an average of about $7 in Asia, which is where the growth is.
The password sharing crackdown must be working for Netflix or they would have dropped it. But there are other problems.
I think Netflix is going to be squeezed between increasing competition and subscriber losses in its highest value market combined with the need to spend for growth in a lower value market. Their quality has plummeted, probably trying to do too much at once, and personally I’m going to cancel just for the quality problem. They’re hardly making anything worth watching anymore.
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Guess what ad-revenue is based on. It’s not subscribers, it’s the average amount of viewers, ie users. Advertisers pay ~$65 (cost is also usually dependent on length of ad and when it’s aired) per 1K impressions, if they lost 1 million users they also lost $65,000 per ad on average.
Note: The $65 may vary, but it’s the latest reported cost I could find.