Subscription services spared US consumer cut-backs
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Joseph O'Halloran
| 11 October 2022
As consumers face what amount to unprecedented cost-of-living challenges, the future of the subscription economy hangs in the balance with people being forced to make hard choices about their spending, yet while there will be cuts they will not be massive says a study from the National Research Group (NRG).
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NRG’s study, The Subscription Economy Grows Up as Consumers Cut Back, was based on research of 2,509 US consumers, aged 18 to 64, conducted in August 2022. It found that 51% of consumers say that subscriptions now make up a “significant” portion of their monthly spending. And even as 66% of consumers expect that they will have to make further cutbacks to their regular spending due to inflation, only 28% of consumers plan to decrease their number of subscriptions over the next six months.

Just over half (56%) of consumers have taken out a subscription planning to cancel before the free trial ended — and 73% of them have been charged because they forgot to do so. Thankfully for the video industry, Amazon Prime, TV and film streaming services were among those services that were least likely to be dropped.

Yet streaming subscriptions were not immune to market pressures and the research showed that users were very interested in looking at other models for their services. Indeed NRG said that all signs suggest that advertising video-on-demand (AVOD) models are about to become much more commonplace within the streaming landscape; and consumers seem primed to embrace that transition.

Specifically, 53% of consumers describe themselves as generally willing to accept ads in return for a lower price, while only 28% were they are generally willing to pay more to avoid ads (with the remainder having no preference either way). The demographics most likely to express a preference for AVOD models included women (59%), over-50s (63%), and those making less than $50,000 per year (58%). Just under a third said they would buy a free service with a large amount of ads while 49% would purchase a service with a small monthly fee and a few ads and only 19% would go for a service with a high monthly fee and no ads.

The Nsurvey also revealed that $10.60 is the maximum amount the average consumer would pay for a streaming service that included ads and a quarter of US consumers admitted to password-sharing, aka using a streaming service they don’t subscribe to.

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