One-third of consumers to scale back streaming subscriptions

27 December 2022 Consultancy.uk 4 min. read
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Six in seven consumers globally (86%) want an all-in-one platform to simplify their entertainment experiences with video streaming, fantasy sports, social media, ecommerce and more, according to “Reinvent for growth,” a new report from Accenture.

For longer than a decade, streaming has been talked about as ‘the future’ of video-entertainment. Early video-on-demand (VOD) market leaders Netflix and Amazon Prime saw rapid success with subscription-based models, which would deliver an almost limitless number of films and series to consumers instantly.

This model seemed perfectly positioned to win even more market share amid the Covid-19 pandemic, with cinemas shut, and traditional television operators pushing against limited broadcasting capacity to provide fresh content. But the last year has seen the VOD boom finally grind to a halt.

Do consumers expect to change the amount they spend on entertainment across subscriptions and one-time purchases in the next 12 months

Record levels of inflation have hit consumers’ pay-cheques, while pay has remained largely stagnant – greatly decreasing most people’s spending power. At the same time, having seen the likes of Netflix succeed by streaming content produced by Hollywood’s studio system, many conglomerates have followed Disney’s lead to cut out the middle-man, and launch their own subscription services.

This has created a perfect storm; an over-saturated market coupled with declining consumer confidence – leading to a phenomenon dubbed ‘subscription fatigue’. Very few customers can afford, or want, to pay a fee to all these individual sources – and many are looking to scale back on VOD as a result.

A new, global survey of 6,000 consumers by Accenture has shown that only 18% of consumers intend to grow their subscription spending in the coming year. In contrast, 38% will cut back – with a worrying 15% saying they will “greatly decrease” the amount they spend on subscriptions. This suggests some VOD providers can expect dramatic tumbles in their revenue over the coming months – even as 43% of consumers simply expect to maintain current levels of spending.

Commenting on the findings, John Peters, a Managing Director in Accenture’s Media & Entertainment industry practice, said, “Standalone streaming services are running up against some simple facts: There are limits to what consumers will pay for and only a certain amount of complexity and options that they are prepared to deal with. It is time to reimagine entertainment ecosystems so that media companies can move to profitable growth by helping consumers get everything they need and want.”

In terms of how VOD suppliers might do that, Accenture’s study suggests collaboration may be key. While each production company has sought out its own slice of the pie, launching the likes of Discovery+, HBO Max, and Paramount+, this has atomised the market in a way many consumers would now actually pay to avoid. A 41% chunk of customers told Accenture that they would favour subscribing to an all-in-one platform for their entertainment services. In addition, 61% long for the ability to share their streaming profiles across platforms to allow for better personalisation of content.

Consumers who use cross-service search engines agree

Illustrating how consumers are already acting on those impulses, Accenture found that a majority of those polled use cross-service search engines. In 2021, 47% of consumers used them, but in 2022, this has risen to 68%.

At the same time, consumers who used cross-service search engines agreed that they were a great means of finding applicable content – but were disappointed when they were recommended content their subscriptions did not cover. A 71% majority said cross-service searches were good ways to find content, and 69% said they saved time when looking for that content – while 68% found it easier than actually going direct to a streaming site (often geared toward promoting certain products) to look.

But 63% said it was “frustrating” when they were recommended content on services they were not subscribed to – presenting a clear gap in the market for an all-in-one provider to step up. Whether that will be possible remains to be seen – but if not, it looks likely that the streaming bubble is destined to burst for at least some of the operators currently enduring flagging subscription rates, and scrambling to cut costs.