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Consumers curb media subscriptions as cost of living jumps

The trend: Consumers worldwide are rethinking their subscriptions for streaming and other services as they feel the squeeze from inflation and rising interest rates.

  • 31% of 2,612 Americans surveyed in March planned to cancel some subscription services this year, per a Recurly study.
  • 19% of UK consumers have abandoned a video streaming service as subscription rates increase to be able to cover grocery bills, per KPMG. Nearly a third (29%) of UK consumers have borrowed or used savings to pay for subscriptions to video, music, and gaming and streaming services as well as news in 2022.
  • From October 2021 through May, retail product subscriptions have fallen among the major US age groups, per The average number of subscriptions of baby boomers and seniors during that time slipped from 2.2 to 2.0, while other generations saw steeper drops—Gen Z and Gen X subscriptions fell from 4.9 to 3.6, and millennials’ from 5.6 to 4.7.

Consumers are shifting priorities to being able to afford non-discretionary goods, making entertainment options a luxury as prices rise.

Scramble for media companies: Netflix lost 970,000 subscribers in Q2 and plans to launch an ad-supported subscription tier in early part of 2023. As consumers spend less time and money on subscription OTT video, the fortunes of many companies hang in the balance.

  • Digital media player supplier Roku cited “recessionary fears” as it reported quarterly results that missed analyst expectations last week and said consumer spending would soften.
  • Social media companies are also testing the waters around subscription options, with Instagram testing various features for creator subscriptions.

Why this matters: Although subscriptions are a reliable way to bring in profit, consumers will prioritize spending on essential goods for the time being and may abandon digital subscriptions at a growing rate.