Spending

Video streaming most vulnerable to UK consumer spending cuts | Media analysis | Business | New

The UK cost of living crisis is well and truly underway and households are prioritizing spending.
The UK consumer survey conducted by OnePoll looked at media subscription services, including video streaming, TV providers, music streaming, mobile (e.g. SIM-only plans), subscriptions to media outlets and game streaming.

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

Additionally, nearly two-thirds of consumers (64%) say they are reducing the number of media subscriptions they pay for because they are worried about the general increase in the cost of living and want to save money. This was the main reason cited by all age groups. Up to 15% of consumers have missed or defaulted on payment for a media subscription service in the past three months and 17% of consumers have stopped subscribing to a video streaming service to pay food bills more high this year.

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

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

Video streaming companies are the 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. Analyzing how many people are cutting overall, 8% have reduced their monthly spend on media subscription services by £1-5; 18% reduced it by £6-10; 12% reduced their bills by £11-15 and 5% said they reduced their bills by £16-20 per month.

It’s no surprise that younger age groups have the most subscriptions and pay the most in total for their media subscription services combined. At the start of the year, 18-24 year olds had an average of 21 different media subscriptions while the over 65s had just 13. 19% of 18-24 year olds spent between £151 and £200 a month compared 3% of 55-64 year olds and 5% of over 65 year olds. Three-quarters (74%) of 18-24 year olds plan to end a subscription in the next six months, while 21% of 55-64 year olds and 32% of 65+ year olds think they will.

The price increases affected the youngest the most. When it comes to mobile phone bills, the study found that 90% of people aged 18-24 had seen their monthly bills increase this year, compared to just 39% of people aged 55-64. With video streaming services, 90% of 18-24 year olds have seen their monthly payments increase, compared to 41% of 55-64 year olds.

While consumers and media companies are feeling the pinch, organizations’ customers will appreciate them in the long run if alternative payment options or plans can be introduced to help them continue using their services, said Ian West, head of from TMT KPMG UK commenting on the results.

“Unfortunately, the current crisis is not expected to go away anytime soon, and I hope this industry will adapt to support its customers through difficult times,” he noted. “The decline in subscriber numbers seen so far is just the tip of the iceberg. The data reveals that year-to-date, consumers are paying for roughly the same media subscription, with the average number dropping from 14.2 to 14 overall. Obviously people haven’t taken down too many services yet, but they’ll probably do it in earnest in the second half of 2022.”

Linda Ellett, UK Head of Consumer Markets, Leisure and Retail, KPMG UK added: “It is clear that younger age groups will reduce their media subscriptions the most. This can be partly attributed to the fact that they are likely to have comparatively lower disposable income than other demographics and generally show less loyalty and more changes in other shopping behaviors. It is also evident that younger age groups have more subscriptions and were spending higher amounts in the first place, which means they have more flexibility to be able to make changes to save money.