Video streaming most vulnerable to UK consumer spending cuts | Media Analysis | Business | News | Rapid TV News
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The UK cost of living crisis has well and truly kicked in and households are prioritising expenditure, and says research from KPMG, media services are under review with nearly a quarter of people ready to swing the axe on streaming.
Netflix screenshot 2 20March2020
The survey of UK consumers conducted by OnePoll looked at media subscription services including video streaming, TV providers, music streaming, mobile (e.g., SIM only plans), news outlet subscriptions and gaming streaming.

Overall, the study showed people have struggled to pay for their media subscription with over a third (35%) of respondents saying that while the number of subscriptions they pay for increased during the pandemic, 64% are now cutting back because they are worried about the general increase in the cost of living. When asked why they are cancelling media subscriptions, nearly half (48%) said it was because the company put their prices up and it became too expensive. Almost a third (29%) of people have needed to borrow money or use savings to cover the costs of subscriptions since the beginning of 2022.

Moreover, almost two-thirds of consumers (64%) said they are decreasing the number of media subscriptions they pay for because are worried about the general increase in the cost of living and want to save money. This was the primary reason given by all age groups. As many as 15% have missed or defaulted on a payment for a media subscription service in the last three months and 17% of consumers stopped subscribing to a video streaming service to pay for higher food bills this year.

KPMG also quoted data from the Institute of Grocery Distribution showing that many people have stopped subscribing to some services to pay for higher food bills this year, which are expected to rise at a rate of 15% this summer. As a result, 19% have sacrificed a video streaming service; 15% have ditched a TV provider; 14% have stopped paying for a music streaming platform and 15% have terminated a mobile contract due to increasing food prices.

The survey showed just how much media companies have been affected by rising costs, which they have had to pass on to their customers. The data revealed how consumers have seen their bills for all media subscription services rise throughout 2022, namely 60% of people have seen their mobile phone bill increase; 74% have had their TV subscription bill go up; 68% are paying more for a video streaming service; 71% have seen a rise in cost of a music streaming service.

Video streaming companies are most vulnerable to a drop in subscriber numbers, with 22% of consumers saying they will reduce the number of these services they pay for in the next six months. This figure was 18% for TV providers, 16% for music streaming and 14% for mobile. Analysing how much people are cutting back overall, 8% have reduced their monthly spend on media subscription services by £1-5; 18% have cut it by £6-10; 12% have cut back by £11-15 and 5% said they have reduced their bills by £16-20 per month.

Not surprisingly, younger age groups were found to have the highest number of subscriptions and pay the most in total for their combined media subscription services. At the beginning of the year, 18–24-year-olds had on average 21 different media subscriptions whereas the over 65s had just 13. 19% of 18–24-year-olds were spending £151-£200 per month compared with just 3% of 55–64-year-olds and 5% of those over the age of 65. Three quarters (74%) of 18–24-year-olds are planning to end a subscription in the next six months, while only 21% of those aged 55-64 and 32% of 65 and over think they will do so.

Price hikes were hitting the youngest most. Looking at mobile phone bills, the study found 90% of those aged between 18-24 had seen their monthly bill go up this year, compared to just 39% of those in the 55-64 age bracket. With video streaming services, 90% of the 18-24 age group have seen an increase in their monthly payments, compared with 41% of 55–64-year-olds.

While consumers and media companies alike are feeling the pinch, organisations’ customers will value them in the long term if alternative payment options or plans can be introduced to help them continue to use their services, said Ian West, head of TMT KPMG UK commenting on the findings.

“Unfortunately, the current crisis is unlikely to disappear anytime soon, and I hope that this industry adapts to support their customers in times of difficulty,” he noted. “The dip in subscriber numbers seen so far is merely the tip of the iceberg. The data reveals that since the start of the year consumers are paying for roughly the same number of media subscription services, with the average number declining from 14.2 to 14 overall. Clearly, people haven’t scrapped too many services yet, but are likely to do so in earnest in the second half of 2022.”

Linda Ellett, UK head of consumer markets, leisure & retail, KPMG UK added: “It is evident that younger age groups will cut back most on their media subscriptions. This can be partly attributed to the fact that they are likely to have a comparatively lower disposable income than other demographics, and typically exhibit less loyalty and more switching in other purchasing behaviours. It’s also evident that younger age groups have more subscriptions and were spending higher amounts in the first place, meaning they have greater flexibility in being able to make changes to save money.”