During economic downturns, products and services that provide comfort and escapism – like chocolate – tend to perform well. Could entertainment subscriptions be our newest version of “escapism chocolate”?  

Entertainment subscriptions are increasingly becoming household staples across the UK. As of September 2024, about 59% of UK households (approximately 17.1 million) are subscribed to Netflix, while around 45.9% (about 13.4 million) maintain Amazon Prime Video subscriptions. This widespread adoption underscores the integral role streaming services play in British entertainment consumption. 

Looking ahead to 2025, the resilience and allure of subscription services, particularly within the entertainment sector, appear robust. Only 20% of consumers anticipate reducing their subscription levels in the next 12 months, marking a notable shift from the forecast for 2024.

Consumer trends and brand impacts 

Clusters’ recent study reveals several trends and their potential impact on the subscription economy, especially for giants like Netflix, Amazon Prime, and Disney+. 

1. Stable or increasing subscription rates: 80% of UK consumers are expecting to maintain or increase their subscription services, showing a clear indication of the perceived value and integration of these services into daily life. This stability offers subscription brands a solid base of recurring revenue and the opportunity to innovate without the immediate pressure of declining user numbers.

2. Dominance of major players: Netflix’s leading position, followed by Amazon Prime and Disney+, highlights the strength of established brands with broad content libraries and high-quality original programming. This dominance necessitates that new entrants in the market differentiate themselves either through niche content, superior user experience, or innovative pricing models.

3. Subscription sharing: 39% of users admit to sharing subscriptions with family and friends – but is this a challenge or an opportunity? While it may initially seem like solely a loss in potential revenue, subscription sharing increases the service’s reach and engagement, often acting as a form of organic marketing and potentially leading to new paid subscriptions as shared users grow to value the service. 

4. Short-term subscriptions and churn: Almost a third of subscribers (32%) claim they are only signing up to access specific content and then cancelling, which can significantly impact revenue and complicate subscriber growth metrics. Brands can counter this by considering: 

• Content discovery: Promoting content bundles that cater to diverse interests and audience segments to enhance viewer engagement and prolong subscription lengths. Alternatively, introduce a segment-based recommendation engine to help audiences in discovering more relevant content. An example of this strategy’s success is ‘Squid Game’ on Netflix, which effectively connected with a unique audience segment, something that traditional broadcasters could never have achieved. 
• Enhancing stickiness: Creating engaging content that releases over an extended period or improving the overall user experience can increase the stickiness of subscriptions. This strategy also allows viewers to ‘watch along’ with others; i.e. discussing on social media platforms. 
• Membership benefits: Providing additional benefits such as discounts, exclusive access, or integrations with other services could add value beyond the primary content offering. 

5. Use of unauthorised sites: 41% of users confess to accessing content through unlicensed sites, highlighting the ongoing challenge of digital piracy. To counter this, brands might want to consider: 

• Improving accessibility: Making content more accessible, possibly through more flexible pricing tiers or improved distribution platforms. 
• Raising awareness: Educating users about the risks and ethical implications of using unauthorised sites. 
• Offering unique value: Ensuring that the paid service provides significant additional value over what can be obtained from free-to-use sites, such as higher quality streams, better user experience, customer service, and exclusive content. 

Strategic implications for brands 

For brands, these trends highlight the importance of understanding audience segments’ behaviour in-depth and adapting business models to meet changing preferences. Developing a deep understanding of what drives loyalty and satisfaction among their user base can help brands mitigate churn and build a more robust economic model. 

The resilience of subscription services amidst evolving consumer habits offers both challenges and opportunities. Brands that can adapt to these dynamics, offer compelling value, and effectively engage their users are likely to thrive. 

Clusters has worked in the TV and media industry for over 20 years. Want to learn more about your audience? Get in touch with us today.