Brits abandon streaming services as cost of living squeezes budgets
More people are cancelling their video subscriptions to save money in the face of the cost of living squeeze, with under-24s most likely to walk away.
In the second quarter of the year, almost 1.66 million services were dropped from the likes of Netflix, Now and Disney in the UK and more than a third of these were directly attributable to people tightening their belts. Half a million households cancelled all their subscriptions, according to Kantar, the market researcher.
It comes after a trend that started in the first three months of the year, when 1.5 million video on-demand subscriptions were cancelled.
Now, in a reversal of previous trends, the decline is being driven by younger audiences as they turn to free alternatives such as the BBC iPlayer, ITV Hub and TikTok.
Household budgets are under intense pressure, with prices rising by 9.1 per cent a year, the highest inflation rate for 40 years, and with the Bank of England warning that inflation could reach 11 per cent within months.
According to Tom Harrington, of Enders Analysis, life is only going to get tougher for the platforms because “it isn’t just their direct competitors but every other household expense they have to worry about. Expect an acceleration of consolidation, bundling with other products, and new, desperate moves. We are already seeing cuts in content spend and staff redundancies. A number of these services already didn’t make much sense in terms of their business models; this stress will expose them even more.”
In a change to its business model, Netflix said last week that it was working with Microsoft to introduce a cheaper service, funded by advertising, by the end of the year. The company said it expected to have lost two million subscribers in the second quarter.
Kantar’s report also looks at which services are doing well. Amazon Prime is storming ahead with the biggest share of new subscriptions, of 37.9 per cent, which the research group attributes to a generous free trial period, as well as the entertainment channel being part of a broader package of services that the retail powerhouse offers, such as free delivery.
When customers were asked how they rated the streaming services, Netflix suffered a fall in popularity, “driven by a perceived decline in value for money and satisfaction with the quality of the shows”. A third of those leaving the service put it down to price rises, despite the release of Stranger Things and Ozark in the quarter.
Disney+ now gets higher satisfaction ratings than Netflix for the quality and variety of its programmes. It also recorded an all-time low in terms of planned cancellation rates. Andrew Skerratt, global client manager at Kantar, said this was because of the binge-worthy content on the platform, such as Grey’s Anatomy and 24.
Apple TV’s acquisition of British-themed content such as Ted Lasso and The Essex Serpent has proved popular. It won its highest ever share of new subscribers and fewer customers than ever plan to cancel the service.
Netflix, which has suffered the sharpest share price reversal of any of the Big Five technology companies this year — it is down 68 per cent since January 1 — is due to report second-quarter figures tomorrow.