The contract-free subscription habit

04 Dec 2017  |  Anne Tucker 
The contract-free subscription habit

Contract-free subscription services are taking hold, particularly within video and audio. But how popular are they becoming? Taking research from within Mediatel's Connected Surveys module, Anne Tucker, Head of Research and AV, digs into the data to look at the impact they are having on the media industry.

Over the past few years there has been a distinct shift in the way people are more free to consume content however they wish.

As part of this, consumers are increasingly questioning their hefty monthly TV service bills and long contract obligations through the likes of Sky and Virgin.

Sky penetration varies between 30-40%, depending on which industry survey you wish to be informed by, and Virgin sits at between 13-16% household penetration. Virgin's numbers have been very consistent for years, whilst Sky's has shown a slight decrease. Regardless of any dips, the paid set-top box is still very much alive and well in over half of UK homes.

What is up for debate, however, is whether the full package is still the option of choice for these TV services, and increasingly vague financial reports make this harder to ascertain. Not so much cutting the cord, as was a fear several years ago, but a trim, here and there.

Increasingly, consumers are looking to monthly no-contract subscription services, such as Netflix, Amazon Prime Video or Now TV, where people do not have to commit to such a long term contract or financial outlay for high quality TV content. And of course, much of what is on Amazon or Netflix is uniquely available through these services.

Within any of these subscription services, there is a distinct age profile differential, with the younger generation more au fait with the newer VOD services than the older generation as you would expect. Seeing the numbers laid out makes you realise the distance that needs to be travelled before these behaviours become fully mainstream across all demographics.

Looking at Netflix, personal use by 16-24s is currently around 55%, while for 55+ it is just over 10%. For Amazon Prime TV, those figures shift to around 35% for 16-24s, whilst over 55s is around 16%, clearly beating Netflix usage, according to Mediatel's Connected Screen survey.

Adoption of these bitesize monthly subscription models is on a strong upward trajectory and consumers are embracing this behaviour not just in TV, but in audio as well.

Subscriptions to the likes of Spotify, Amazon Music and Google Music monthly paid for services are measured by RAJAR MIDAS and show that on demand music services are used by over 40% of 15-24s.

Looking closer at the individual services, from Mediatel's exclusive Video and Voice survey, run by YouGov, Spotify is the clear brand winner currently, with the nearest competitor Apple Music, having half the claimed usage.

As part of a major revamp of Mediatel's Connected Surveys module, data from RAJAR's MIDAS survey will become available to RAJAR subscribers in the New Year within the module. This will sit alongside Mediatel's Connected Screens survey, Ofcom's Technology Tracker, BARB Establishment Survey and the new and exclusive Video & Voice survey, run by YouGov. More information on this coming soon!

Using the Mediatel Connected Surveys analysis tool and digging into the data a little further it can be seen that if consumers take out one no-contract subscription, that they are more likely to take out others. Perhaps this is because they have grown familiar and comfortable with the concept of small monthly subscription charges.

For example, around 16% of respondents in Mediatel's Connected Screens survey claimed to visit a newspaper website that they paid to subscribe to. However, when looking at Netflix users, this number jumped to around 27%, and for paid Spotify subscribers, this number jumped to nearly 36%. Similar trends could be seen for paid magazine websites, and for paid newspaper and magazine apps.

Monthly subscription services are clearly a flexible, relatively cheap service that will continue to gain traction over the coming years, as consumers become more confident with the ease with which they can dip in and out of services. A couple of months of Now TV to capitalise on Game of Thrones is certainly a cheaper solution than a year tied into a Sky TV subscription to access Sky Atlantic.

It will be interesting to monitor over the next few waves of these featured surveys how the demographic splits may merge as each age profile begins to approach saturation.

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