Over 25% of U.S. Households Cut Streaming, Pay-TV in Past Six Months Due to Inflation

Record-high inflation has caused American households to cut back on their spending, and it’s beginning to affect how they watch TV according to a new survey from Aluma Insights. When asked by Aluma which actions they have taken to cut back on spending in the high-inflation environment over the last six months, 19% of decision-makers said that they have downgraded or canceled a subscription video-on-demand (SVOD) streaming service. In addition, 16% say they have downgraded or canceled a pay-TV service. Accounting for those surveyed who have done both, 26% of respondents have made changes to their viewing habits over financial concerns.

The survey added that decision-makers 25 to 44 years of age were most likely to cancel both and that households earning under $30,000 per year were more likely to cut back on both types of subscriptions. Despite the stark numbers, those aren’t the most frequent ways that consumers have cut back. Fifty-nine percent of respondents told Aluma that they have “dined out less often,” while 53% said that they have “drove less.”

“Domestic TV and video subscription growth was slowing before the recent wave of inflation,” Aluma founder and principal analyst Michael Greeson said. “But the rising costs of consumer goods and services, as well as housing, added fuel to the fire, putting even more pressure on consumers to reduce these expenses.”

The release of the study comes at a time when the entire streaming industry is in flux. The traditional assumption that there were still millions of untapped customers in the world came crashing down as the once sterling subscriber growth that Netflix had enjoyed for a decade came to an end this year, most recently seeing the streaming giant lose 970,000 customers in the second quarter of the year. While other streamers have remained flat or shown modest growth, the pullback from pandemic highs and the increasing economic uncertainty have led many to reevaluate their entertainment spending.

Additionally, much of the streaming world is embracing ad-supported video-on-demand (AVOD) platforms and free, ad-supported TV (FAST) channels as alternatives to high-priced SVOD options. Recent studies have shown that nearly 60% of U.S. households are regularly watching FAST channels, which offer a linear TV-watching experience complete with commercial breaks baked in.

Aluma indicated in its study that more cancellations to SVOD services and cable and satellite providers are likely if the economy remains unsteady. With both Netflix and Disney+ launching ad-supported tiers in the coming months, by deviating from the original ad-free streaming model, these services are finding ways to keep customers engaged, despite rising cost concerns.