EY study: consumers are still spending on digital home products and services despite cost-of-living crisis

• Just 16% of survey respondents have reduced or plan to reduce expenditure on home broadband, mobile connectivity or streaming
• Value-for-money perceptions remain positive; premium service appetite grows
• Pain points persist: 26% still regularly experience unreliable internet access

Less than one in five digital households (16%) have reduced or plan to reduce their spending on home broadband, mobile connectivity or streaming according to the latest EY Decoding the digital home study – which surveyed more than 21,000 consumers on their attitudes toward technology, media and telecoms experienced in the home across eight countries: Canada, France, Italy, South Korea, Spain, Sweden, the UK and the US. Less than a third (32%) have not taken any measures cited in the study to reduce spending on connectivity content and home technology in response to the cost-of-living crisis, rising to 49% in the UK.

Despite growing concerns among some households about rising broadband and streaming/pay-TV prices (cited by 63% and 60% respectively), perceived value-for-money remains consistent year-on-year and has risen substantially in relation to content from broadband providers (51%, up from 41% last year) and smart home products (40% vs. 34% last year). Perceived value for money for broadband provider content is highest in the US (60%) and the UK (55%).

This positivity is compounded by increased enthusiasm for premium broadband offerings, with consumers increasingly willing to pay more for good customer service (up 6% year-on-year to 36%) and back-up connectivity (also up 6% to 35%). Turning to streaming services, 40% of respondents would be willing to pay more to access all content via a single platform, rising to 50% in the US and 51% among 25- to 34-year-olds across all markets.

Tom Loozen, EY Global Telecommunications Leader, says:

“Consumers are reprioritizing as society adapts to hyper-inflation, yet broadband and connectivity offerings have in many ways weathered the storm. Improved value perceptions are encouraging for connectivity providers, suggesting their bundle propositions are resonating well. This is not only intensifying competition but presents huge opportunities for providers that can differentiate themselves by offering superior customer service and network reliability through the lens of simplified packages that appeal to all demographics.”

Uptake of new services and smart home tech stalls

While the study highlights the resilience of the digital home, new services and emerging smart home products are still challenged by the pressure on household spending. Nearly half of households say the economic climate has made them less likely to pursue new connectivity and content experiences (43%) and adopt new technologies and gadgets for the home (48%). And 56% say pressure on finances has made them more likely to shop around for the best connectivity or content deals.

Similarly, penetration rates of more sophisticated home tech remain low. None of the 17 devices or products featured in the study (including smart security and digital home assistants) are currently owned by more than one in five households, and adoption levels are only increasing slightly year-on-year. Notably, attractive pricing is the No. 1 factor influencing consumers when choosing a smart home device (40%), with trust in the brand ranking closely behind (39%).

Platform overwhelm in a competitive streaming market

Competition between streaming services continues. As more services enter the market, there are signs of decision fatigue with 54% agreeing that they are faced with too much choice across platforms. Meanwhile, 20% of streamers indicate that they have canceled at least one monthly subscription in the previous 12 months, with 13% planning to cancel one or more in the future. The competitive landscape and spending pressures both feed into these decisions, with 45% citing cost savings as a reason to cancel, while 31% cite inadequate content or preference for alternative streaming services.

Network reliability fails to show material improvement

The study further highlights that network reliability continues to be a key pain point for consumers. More than a quarter of respondents (26%) say they experience an unreliable home broadband connection, down only slightly from 28% in each of the preceding two years. Perceptions around mobile data are more concerning: despite increasing 4G and 5G coverage levels, 29% indicate that they experience an unreliable mobile connection often or very often – up from 24% (2022) and 22% (2021). Overall, a third of households (33%) rank improving the reliability of their connection as the biggest service improvement their provider could make.

Adrian Baschnonga, EY Global Technology, Media and Telecoms Lead Analyst, says:

“Streaming providers need to be as agile as possible when pricing and positioning their packages if they are to cut through an increasingly crowded landscape. Meanwhile, connectivity providers should take steps to address persistent issues around reliability, whether by educating customers around how to maximize signal strength or providing more proactive support during network outages. Better levels of brand trust will be critical to smart home providers if they are to accelerate adoption of new technology for the home.”

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About the study

The EY Decoding the digital home study is based on an online survey conducted for the EY Global Technology, Media & Entertainment, and Telecommunications (TMT) team of 21,000 households in Canada, France, Italy, South Korea, Spain, Sweden, the UK and the US. It was conducted in February and March 2023, updating our previous annual surveys of multiple markets.

The survey is designed to understand changing consumers’ changing behavior and attitudes in relation to technology, media and telecommunications products and services. Our latest findings focus on topics such as the impact of the cost-of-living crisis, the appetite for service bundles, and changing customer journeys, also providing specific insights relating to connectivity, content and smart home technology. Additional thinking, insights and analysis are provided by the EY Global TMT team.