The UK’s subscription boom, which emerged in the early phase of Covid-19 pandemic, has turned out to be short-lived. To survive, subscription companies must ensure that they are valuable to the audience. And a little bit of empathy would help.
For Achmad Majid, 2021 was a turning point year. He completed his undergraduate studies, began working as a cybersecurity professional in London, and started paying for all his subscriptions himself without relying on student offers or pocket money from his parents.
That’s when he realised: “This is too much.”
At that time, he was subscribed to at least 10 online services.
There were iCloud and Google One for additional cloud storages, Netflix, Disney+, Amazon Prime, and YouTube Premium for watching films or TV shows, Spotify for listening to music, PlayStation Plus and Nintendo Switch Online for playing games, and Patreon for having an early access to content made by his favourite creators.
“Suddenly, you woke up in the morning, you saw everything got deducted by that, that, and that,” said Majid, a 23-year-old British national who grew up in Malaysia. “It would be like £60 gone.”
He than started reassessing his subscriptions and, after careful thought, decided to ditch three of them: Disney+, Spotify, and Nintendo.
“You feel overwhelmed, and you feel the need of cancelling it because, in the end, it doesn’t benefit you,” he said, adding that he’s considering to further reduce his subscription spending.
Majid’s decision to scale back his subscriptions speaks volumes about today’s subscription economy.
Throughout 2022, about 35% of consumers globally unsubscribed from at least one of the top video streaming services, while 26% planned to cut another subscription this year, according to an Accenture survey involving 6,000 consumers from 10 countries across the world.
Moreover, 55% of consumers felt overwhelmed by the number of streaming services to choose from and 72% reported frustration at finding something to watch.
In the UK, Barclaycard data shows that digital content and subscription spending fell 0.8% in 2022 compared to a year before.
Meanwhile, the number of video streaming subscriptions dropped by two million to 28.5 million, with 12% of consumers planning to cancel at least one subscription in the first quarter of 2023, according to Kantar.
This occurred only two years after the UK witnessed a subscription boom in 2020, when people turned to online services to facilitate their needs—from groceries to movies—during the Covid-19 lockdown.
In that year, overall entertainment spending increased by 16.8% annually to a record £9.05 billion, as noted by the Entertainment Retailers Association.
Lifestyle changes amid the cost-of-living crisis have made the subscription boom short-lived, said brand consultant Hayley Ard.
Many people have gone back to the office and started reengaging with friends and relatives, leaving them with limited time to consume online entertainment, she said. At the same time, people have become more selective in their purchases, as inflation soared to the highest rate in four decades last year.
“Yes, a lot of the restrictions have been lifted as regards the pandemic, but we’re also in a profound state of economic crisis,” said Ard, who currently serves as the associate director at advisory company FlameFinch Partners.
“It’s only natural that people are going to cut things that don’t seem strictly necessary.”
Another issue is people are tired of having too many entertainment services on their gadgets, especially considering the exclusive contents offered by different streaming platforms, Ard said.
“I hate pulling up, like, ‘What movie I want to watch?’ and finding out that I need to have six different subscriptions based on my taste,” she said.
“You know, one of the biggest marketing strategies out there is simplicity, and that’s for a reason. That’s what we all seek.”
Therefore, it makes sense that most consumers crave an all-in-one platform that includes video streaming, social media, e-commerce, and more to simplify their experiences, as pointed out by Accenture.
Even the already overwhelmed Majid opts to maintain his Amazon Prime subscription because it provides access to a wide range of products and services, from free shipping on items bought on Amazon to original movies, games, and books.
People also look for simplicity when it comes to managing their subscription payments, with many of them now relying on digital banking and finance apps such as Revolut and Monzo. Such apps allow them to easily track expenses, monitor bills, and even cancel unwanted subscriptions by blocking upcoming payments.
“What we’re seeing is people being more ruthless about what they pay out to,” said Esther Kezia Thorpe, a media analyst and co-host of the Media Voices Podcast.
“This is particularly evident in streaming, where many companies offer monthly fees and it’s very easy to cancel and resubscribe later if a rival has something else you’d prefer to watch at the time.”
And that’s what happened to Netflix. The world’s biggest streaming service lost 1.2 million subscribers in the first half of 2022, the first time in more than a decade.
This initially prompted fears about Netflix’s business prospects, which were soon washed away as the company announced strong results in the second half with the addition of more than 10 million subscribers.
People flocked to Netflix again after it released episodes of returning and new shows, including stand-out titles like Stranger Things, Monster: The Jeffrey Dahmer Story, Harry & Meghan, The Crown, and Wednesday.
“The war between the streaming giants is tough, and shows can make or break a quarter,” said Thorpe.
“You have to have something worth subscribing to. No business is entitled to subscribers. Whatever industry they’re in, if you can create something of value to people, they’re much less likely to cut it when budgets are squeezed.”
In addition to providing valuable services, companies could simply show empathy for customers at a time of financial hardship, Ard said.
Many people would appreciate it if, at the very least, they could easily unsubscribe without going through numerous hurdles or have the flexibility to pause their subscriptions for a while, she added.
That’s why, when Netflix accidentally shared its new password-sharing restrictions with all its global users in February, a backlash inevitably followed.
The restrictions, it turned out, were only being trialled in Chile, Peru, and Costa Rica. But users quickly voiced their anger on social media, with some threatening to stop their subscriptions.
One user said: “Netflix you are so out of touch with your customers.”
Majid could not agree more. If the streaming giants still do whatever they want without listening to their customers and trying to understand their needs, he said, more people will grow tired of them.
“Some people just pay for subscriptions because it’s easier than going to a pirate website,” Majid said.
“But if they keep on doing this, I feel like a lot of people would delete [the streaming apps] and go back to piracy.”