Cost concerns and confusion abound in broadband market

The cost-of-living crisis that dominated last year is still making its presence felt, with many consumers looking to switch to cheaper broadband or streaming services, all the while being aware that they may not receive the same level of service, according to EY's Decoding the Digital Home 2024 report.

The report, which is based on an online survey of 20,000 households in seven markets in Europe, the US and Canada, and South Korea, is designed to deepen understanding of consumer behaviour and attitudes towards telecoms and media products in the home. And this year's version is a real mixed bag; the aforementioned cost-conscious consumers are to a degree balanced out by pretty high demand for premium services and willingness to pay for a top-end experience.

Those counting the pennies seem to be in the majority though. EY's research shows that customers are worried about price increases on their broadband and streaming plans, with many – particularly in the older demographic – looking for price guarantees to provide some certainty.

Furthermore, a high proportion indicated that they would be willing to, in EY's words, "trade down" in order to keep spending in check, particularly among younger users.

On average 35% of households are willing to trade down to cheaper broadband, even if it comes with lower levels of customer support, the report indicates. Meanwhile, 43% are open to the idea of ad-supported streaming to save on monthly subscription costs (see chart below).

Naturally there are regional differences. EY highlights that over half of US households would be willing to switch to a cheaper, ad-supported streaming offering, which exceeds the average by some way. Meanwhile just under half of users in South Korea are open to trading down to cheaper broadband, but only one in three in Sweden would do the same.

While there is clearly a money-saving trend in evidence here, it is by no means reflective of the entire market. There is also an appetite for premium connectivity and content options. Demand for services that aggregate content at a premium price rose to 44% in 2024, up from 40% in last year's report. The US leads the way here at 53%, followed by Spain and the UK at 48% (see chart below).

But while price and household finances are doubtless among the main driver for choosing a broadband plan or streaming offer, it's not always that simple. We have reported a number of times in recent years on the growing number of content options and subscription services consumers need to sift through before they even get to the buying decision, and this latest EY report reinforces a strong message from elsewhere in the industry: customers are overwhelmed by the choices they need to make in a crowded market.

"More than half of households on average across all markets agree that there is too much choice of broadband providers, streaming platforms and smart home tech," the EY report reads. "It's clear that service providers need to ensure their value propositions are as compelling as possible, so they stand out from the crowd and are well-placed to build and sustain customer relationships."

That's good advice for all the players jockeying for position in this market, be they telcos, content providers or indeed any other supplier whose business relies upon securing consumer wallet share.