More than a quarter of British consumers (13.9 million or 27 per cent of the adult population) subscribe to video streaming services such as Netflix and Amazon Video, according to research published by YouGov and subscription commerce, billing and finance solutions provider Zuora.
The rising popularity of these services has a huge effect on TV viewing habits, as almost half (6 million or 43 per cent) of subscribers said they now rarely watch ‘normal TV’ (broadcast TV) anymore – that’s 12 per cent of the UK adult population. Looking only at millennials aged 25-34 that subscribe, this number increases to almost two thirds (58 per cent) of subscribers.
The UK-wide study, conducted for Zuora by YouGov, demonstrates the rising preference among UK consumers to pay a recurring fee for ongoing access to video on-demand content, as opposed to buying discs or large channel bundles. This trend is especially evident among 16-24 year olds, as nearly twice as many subscribe to video streaming services as they do to cable or satellite services (44 per cent vs. 26 per cent). In contrast, it is the other way around for 45-54 year olds (23 per cent vs. 49 per cent), showing that the video streaming trend has yet to catch on with the older generation.
Netflix is by far the most popular video streaming service in the UK with 12.4 million subscribers (24 per cent of the UK adult population), followed by Sky Go (7.2 million or 14 per cent), Amazon Video (6.7 million or 13 per cent) and Now TV (3.1 million or 6 per cent). On average, UK subscribers spend £17.53 per month on video streaming services, which may suggest that many sign up to multiple services simultaneously due to a lack of price and content options which would suit subscribers’ more individual viewing needs.
However, this number is, at least momentarily, still dwarfed by the average monthly spend of £60.83 on cable or satellite services, showing that the likes of Sky or Virgin still charge a flat fee for large channel bundles, as opposed to offering multiple, more tailored content packages at different price points.
The research also found that almost one third (4 million or 30 per cent) of Brits who subscribe to video streaming services don’t plan to ever buy a DVD or Blu-ray again. This consumption shift, from products to subscription services, has far-reaching implications on our daily lives, says Zuora.
Almost two thirds of subscribers (59 per cent) said the likes of Netflix, Amazon Video and Now TV have become an integral part of their lives. When asked about the benefits of video streaming, Brits overwhelmingly cited the ability to enjoy films, shows and series in a way that suits them (81 per cent), discover new content suited to their taste (75 per cent), and stream video on multiple devices (56 per cent).
As video streaming services rise in popularity among consumers, they reap huge revenue benefits, but subscription business models also allow them to enter a direct relationship with their customers. Millions of plays a day, including when you pause, rewind and fast forward; as well as user ratings, searches, geolocation data, viewing times, device information and social media feedback – all paint a very clear picture of what viewers like to watch. This helps streaming services assess the viability of their content and membership strategy, and price and package services to sign up even more subscribers.
However, video isn’t the only industry in what Zuora dubs ‘the Subscription Economy’ in which consumers see the benefits of subscribing as opposed to buying products outright. Brits also subscribe to media publications (17 per cent of the adult population), software and online storage (15 per cent), financial services (12 per cent), music streaming like Spotify and Apple Music (10 per cent) and food and drink services (5 per cent).
Overall, the Zuora report, A Nation Subscribed: 2016 State of the UK Subscription Economy, found that 40.2 million Brits (78 per cent of the adult population) are now subscribing to at least one product or service. As the notion of paying regular fees for curated access to goods and services becomes mainstream across all age groups, British subscribers now spend on average 12 per cent of their disposable income on subscription services.
According to Tien Tzuo, CEO of Zuora, the popularity of video streaming services in the UK seems to be unabated as the likes of Netflix and Amazon Prime have changed the way we consume content forever. “The heat is on for streaming providers to sign up as many hungry UK viewers as they can, and the winner in this race will be the company that not only delivers the most compelling content, but also the right price packages that meet each subscriber’s individual expectations.”
“Buying and owning products isn’t that important to me,” admitted survey participat Leah B. “I just want the value in what they deliver, rather than the item itself. For example, once I’ve read a book I don’t keep it, I’ll pass it on to friends or donate it to charity. Otherwise it would just be gathering dust sitting on the shelf. Similarly, it’s much more convenient to just stream movies online than buying DVDs, as I get access to the same experience but without the physical product. It’s perfect for what I want! I’m also in the process of moving into my own place where there will be little space and storage options, so I need to be very smart about what products I keep and what I don’t.”
“Ownership is a physical and psychological extension and expression of our identity,” advised Consumer Psychologist Kate Nightingale. “If we didn’t own anything, we would feel like we don’t exist. Materialism has however risen to an unhealthy level, especially in the Western world. Consumers therefore started to look for fulfilment and identity expression via experiences and things they believe in rather than physical products. The growing need for individuality additionally generates a requirement for personalised and authentic experiences and services. Renting and subscription-based companies deliver consumers precisely that: personalised, authentic, fulfilling, and individual experiences.”