Netflix braces to lose users in the US over crackdown on account sharing
In the first quarter of the year, up to 450,000 Netflix accounts were cancelled in Latin America, something that the company itself contextualises in relation to the launch in several countries in the region of measures to combat account sharing. The announcement of this impact coincides with the delay in the implementation of the same strategy in the US, the platform’s most important market in terms of turnover, where a possible cascade of cancellations would be more damaging for accounts.
Added to this delicate scenario is the fact that the overwhelming majority of subscriptions converted in the reporting period come from Asia-Pacific, the area with the lowest average revenue per user in the world for Netflix. An activated account there generates on average just over $8 per month, while in the US and Canada it is over $16, in Europe, the Middle East and Africa it is over $10 and in Latin America it stands at $8.6.
Therefore, the streaming giant faces the need to increase its capacity to generate more money from its customers in its domestic market, given the difficulty of adding subscribers there and the reality that new subscribers from other countries contribute less, which compromises its growth. Indeed, in order to be more competitive in many of them, Netflix has lowered its prices, which means that the average revenue in regions such as Asia-Pacific is likely to continue to fall.
This situation helps to explain why the company has decided to postpone the launch of paid sharing in the US until the end of June, although it has been optimistic about the results obtained so far in the neighbouring country. As indicated in the first quarter accounts, Canada now has a larger user base than before the implementation of measures to make those accessing content with a third-party account pay, and Netflix’s revenue growth there is higher than in the US.
As many as 450,000 Netflix customers were disconnected in Latin America in the first quarter of the year in the context of the launch of paid sharing.
The downstream impact of this forced conversion is equally sensitive because of Netflix’s growing competition in its first market, especially from Disney’s platforms. In a context of high inflation, it remains to be seen how many users consider it appropriate to pay for a service whose catalogue is often questioned, which in turn has led the company to consider reorienting its production to prioritise quality over quantity.
