Opinion

The great un-subscription

By 22 April 2022 No Comments

 

First published on Finextra, by Jaime Lowe

 

The pandemic fueled a mass subscription due to a shared feeling of all those stuck at home, boredom. As a result more people subscribed to Netflix with the streaming giant reaching 220 million subscribers globally. We clung to Netflix, our modern book club, as a way to connect with our loved ones. Our text chains were consumed with Tiger King, Bridgerton, and Squid Game. But then, we all went back to work. Like our other purchases, has Netflix begun to gather dust with the peloton bikes and cake tins bought in the changing Covid trends?

 

Now society has opened back up and is resembling an ounce of normality, work has begun and Mondays dreaded once more. But what has happened with our subscriptions? Our Netflix, Amazon Prime, Disney Plus, and Now TV? Well for a while the answer was nothing, they were just another direct debit coming out our account monthly that we all probably ignored. However, as fuel prices are at a record high, with the month of March seeing a litre of petrol increase by 16p than the month prior. Energy bills have surged due to the 54% increase in price cap on gas and electric on April 1st 2022, creating financial hardship for families across the country. Food prices have reported to be at their highest since records began 60 years ago according to the UN Food Prices Index. Industry experts have warned that prices may continue to climb, with a further 15% increase predicted this year.

 

Something we should be doing more regularly is sitting down with our yearly bank statements and looking at what we have subscribed too. Scrutinize our direct debits and state our cases for which should be kept and which face the chop. Play the dual role of Defense and Prosecution. It seems reassessing our subscriptions is a collective thought. The Financial Times have reported on UK households cancelling streaming services in record numbers. Stating that ‘about 1.5 million accounts terminated within three months’, non-essentials are being evicted from our bank accounts. Netflix has taken a loss of about 200,000 subscribers in that three month time frame. Trimming down our streaming budget is a necessity to cope with the monthly increases in cost of our essentials.

 

Netflix has responded to the great un-subscription, they are launching a cheaper, ad-funded version of the platform. Additionally, there will be a crackdown on password sharing, perhaps in the hope that families and friend groups will invest in their own personal accounts. Netflix have estimated that around 100 million households share accounts which begs the question of how plausible a crackdown of this scope is. However, from the societal drive to cut down on additional expenses this crackdown could actually force more customers out the door. Instead of paying for multiple accounts, Netflix might find that their customers choose to pay for none. They have also alluded to competitive streaming subjects eating into its audience. Society are spoiled for choice which where to spend there money and streaming services are not hard to come by.

 

The recent pattern of un-subscription could be representative of an all-encompassing economic future the UK faces. Netflix is predicted to take a further hit in the current quarter with up to 2 million customers forecasted to be terminating their account. Similarly to Netflix, the UK’s economy is also set to take a hit in the next quarter. Perhaps the trend facing Netflix’s subscription rates are mirroring a general movement in the UK’s economic growth, a downward one. We would hope that prices cannot possibly creep higher and yet the IMF have predicted that the UK’s economy is set to see further inflation of 1.2% in 2023. Meaning the slowest forecasted economic growth of the G7 nations. Increased inflation and tight monetary policy is posing risks to economic activity and movement according to IMF chief economist Pierre-Olivier Gourinchas. Slow economic growth comes hand in hand with IMF’s prediction of unemployment rate forecasted to rise to 4.6%. They say when it rains it pours, perhaps this mass un-subscription is representative of the trickle before the flood. We are willing to let go of our household staples, these streaming services that gave us comfort during a turbulent few years. It is a cause for wonder what UK households will be forced to give up next as inflation skyrockets.

 

The dreaded word on many economists lips is stagflation. It seems unavoidable that the UK faces an extensive period of stagflation with prices increasing as economic growth decreases to a crawl. Economists are expecting inflation to rise a further 8% in the second quarter of the year. Perhaps there will be further cuts to luxury subscription service, not limited to streaming, that will come with the tidal wave that is the predicted future of UK’s cost of living.

 

The great un-subscription may not be over just yet and we may continue to question the future of streaming services.