Nearly 20% of consumers plan to cut spending on streaming services

With consumers still watching wallets more closely over inflationary concerns, Recon Analytics conducted a survey to see where most plan to cut back spending over the next six months – with streaming services landing in the top five.

While the overarching conclusion by Recon analysts Roger Entner and Brett Clark is that telecom has become recession proof (the survey found more people would rather cut back on electricity, heating or car payments than home internet or mobile service), it also shed light on some consumer plans for streaming services.

According to the February survey of 7,110 respondents, pulling back on streaming services is the fourth most popular category where consumers will look to cut costs, with 19% planning to reduce spending on streaming video and audio services in the next six months.

Recon Analytics also runs a monthly Streaming Content Module, and according to the April 2023 results of a survey of 7,642 people, consumers on average have 3.6 streaming subscriptions. Of those, 2.5 are paid for out of pocket, while 0.6 subscriptions are received through mobile service or a home internet bundle, and 0.5 subscriptions are accessed through password sharing.

Recon Analytics graph
19% of consumers plan to cut back on streaming audio and video services.  (Recon Analytics)

In addition to cutting back on streaming services, 16% of consumers plan to cut their cable TV bundle, per the report, “ensuring cord cutting continues and making the looming death of linear television ever more likely,” wrote Entner and Clark.

The April 30 report also questioned impacts of the Writers Guild of America calling for a strike (which came to fruition earlier this week when Hollywood writers took to the picket line after the union and major studios were unable to reach a new contract).

“We are not sure if the TV writer’s guild calling for a strike realizes that fewer and fewer people will realize that no new content is being produced,” wrote the analysts.” Some people might even use the lack of new content as a sign that it is time to cancel it all together.”

Reduced spending on streaming services coincides with the continued rise of free and ad-supported streaming TV services. According to Kantar’s Entertainment on Demand service, through Q1 2023, SVOD services (which are paid and ad-free) lost 2.2 million subscribers compared to Q4 2022 – the segment’s third straight quarter for declines. Kantar said Q1 SVOD losses could be traced to Apple TV+, Netflix and Discovery+.  However, in Q1 AVOD (paid, ad-supported streaming) gained 2.6 million subscribers and free ad-supported streaming TV (FAST) gained 1.7 million users.

Kantar’s analysis pointed to cost becoming a bigger factor for consumers’ choice of video services.

“Despite inflation beginning to cool in the US, cost of streaming has caught up with the industry. In the last two quarters of Entertainment on Demand data, value has appeared to be more of an important factor in sign up, satisfaction, and cancellation,” wrote Kantar analysts. “Consumers are opting to trade down to less expensive options or sign up at a lower price point to find the right balance of value across all of their services.”

On the SVOD side both Netflix and Disney last year introduced respective ad-supported tiers that offer a lower priced option than premium ad-free plans, with the tradeoff of watching commercials. Device players such as Google TV and Amazon Fire TV are among those that have recently leaned more heavily into free content on their platforms, with the latter planning to double down on FAST having seen a 300% surge in monthly hours streamed of that content in the past six months alone. Media company-owned FASTs, some of which are using the service in part as a vehicle to cross promote and reel users into their more premium streaming services, are also enjoying growth. Paramount Global, for example, on Thursday reported Pluto TV had reached 80 million monthly active users in Q1.