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Decoding the digital home 2024

How to adapt to changing demands in the UK digital home

Authors

  • Rob Atkinson

    UK&I Technology, Media and Telecommunications Market Leader, Ernst & Young LLP

  • Adrian Baschnonga

    EY Global Technology, Media & Entertainment and Telecommunications (TMT) Lead Analyst

12 minute read 13 Nov 2024
Related topics
TMT
Telecommunications

As UK consumers’ attitudes and priorities around the digital home diverge, connectivity providers and content providers need to keep pace.

In brief 

  • As UK consumers assess connectivity and content services for the digital home, they’re sceptical about performance promises and overwhelmed by choice.
  • Consumers want more clarity on areas like pricing, broadband reliability — with a significant share willing to pay more for premium services.
  • With UK customers now dividing into clearly defined segments, connectivity and content providers should strive to understand users’ differing needs and act to meet them.

The digital home remains central to the lives of consumers across the UK, generating healthy demand for services offered by in-home connectivity and content providers. Yet with pressures on household finances continuing, households are increasingly seeking value for money and are mistrustful of performance guarantees. The EY Decoding the UK Digital Home 2024 study also finds that many consumers feel confused by the breath of choice in today’s digital home market and perceive little difference between providers, whilst also harbouring growing worries over the potential downsides of digital usage, ranging from digital overload to issues around data security and privacy.

Read the EY UK Digital Home Study Report 2024

PDF (10 MB)

Yet despite such concerns, our research shows that three users in 10 are willing to exchange their personal data in return for service customisation, suggesting connectivity providers and content providers can tap into new revenue opportunities. Meanwhile, other findings indicate that the roll-out of digital sales and support tools has not broken consumers’ attachment to traditional channels, pointing to a need to improve digital customer journeys and blend virtual and agent advice. As these factors play out, we’re seeing the UK consumer population fragment into distinct segments, each seeking different things from the digital home providers they buy from. 

All of these changes are underlined by five top-line insights emerging from our research.

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1

Chapter 1

The latest insights into the UK digital home

Our research reveals that UK consumers’ perceptions and expectations around digital home services are evolving in five areas.

Adoption drivers and barriers continue to have a powerful influence

Whilst broadband performance continues to drive UK consumers’ decisions when purchasing connectivity, their experiences of broadband reliability show no marked improvement year on year, especially in cities: 23% of UK households still experience an unreliable home internet service from their connectivity provider on a regular basis, rising to 28% in urban areas. Younger users are the worst affected, with more than 30% of 18 to 44 year olds regularly suffering from unreliable connectivity. Also, experiences of mobile data signal quality inside the digital home are continuing to deteriorate, with 28% of UK households suffering from poor mobile reliability, up from 25% last year. 

Tellingly, when evaluating broadband packages from connectivity providers, consumers in the UK score above the global average for the importance they attach to broadband speed guarantees, Wi-Fi home coverage guarantees, and the quality of Wi-Fi router or home hubs, reflecting the UK’s lower level of full fibre coverage compared with other markets in our study. Meanwhile, when choosing streaming services, UK households say pricing discounts and promotions feature prominently in their decision-making — and brand trust in content providers is growing in importance, cited by 37% of respondents this year compared with 30% last year, putting it ahead of content quality as a consideration. 

Spending, switching and value for money are in the spotlight

Last year’s research revealed high levels of concern about future subscription price increases imposed by connectivity providers and content providers — and these worries have continued this year. Whilst the share of UK households concerned about rising broadband costs has declined, 62% are worried about higher monthly streaming subscriptions, up from 57% last year. However, when it comes to the trade-off between price and quality, customers’ needs are diverging. Whilst one in three are willing to trade down to a cheaper broadband package to save money, more than four in ten are willing to pay a connectivity provider more for broadband that comes with extra privacy and security features, or for a platform that aggregates all their favourite content. 

At the same time, 42% of households are willing to pay to watch sport on TV — up from 39% last year, and led by 25 to 34 year olds (56%). Together, these findings point to a strong appetite among some consumers for enhanced premium services in the digital home. Younger groups tend to find lower-cost alternatives the most appealing, although subscribers to streaming services across most other age groups are also receptive to saving money by taking ad-supported services from their content providers, with around half expressing an interest in doing this. 

The downsides of digital demand are coming to the forefront

Concerns over the effects of digital usage on people’s mental health are on the rise, with 38% of UK respondents saying they often consider the negative impact of being online on their own wellbeing — a figure that rises to nearly half of those aged under 45. Indeed, many younger users fundamentally question the benefits of the digital world: 47% of 18 to 34 year olds agree that being online is more of a hindrance than a help to their wellbeing.

Consumers in general are even more worried about the proliferation of harmful content, especially the potential impact on children.  

Forty-six percent of UK households are very concerned about harmful content that members of their household might encounter whilst online, up from 38% last year, whilst 62% are alert to children’s potential exposure. Alongside these concerns, households are also aware of the potentially negative impact that artificial intelligence (AI) could have on trusted content. Well over half (61%) are very concerned that AI will make content less reliable, whilst 62% fear that ‘bad actors’ could harness AI to create harmful content.

Consumer demand is driving changes in value propositions 

Recent pressures on household spending have reaffirmed the importance for UK consumers of buying broadband bundles from a one-stop shop connectivity and content provider, with 41% of saying they’re likely to take a broadband package with smart home products and services in the future. Younger consumers are the most interested in these offerings: Among 25 to 34 year olds, smart home bundles (61%) rank alongside broadband and mobile combinations. Whilst this is good news for telcos looking to broaden their service offering in the digital home, other findings point to challenges for such strategies: For example, 38% of respondents don’t see the advantages of buying TV and broadband from the same provider, up from 34% last year. In light of this, connectivity providers and content providers should reconsider their bundling template, with a readiness to embrace less traditional service elements. 

However, whilst the appeal of aggregating connectivity, content and digital home technology is growing for consumers in general, they’re also prepared to take more radical steps in search of higher value from their providers. One of the most prominent is using 5G mobile as a substitute for traditional home broadband — with over one-third of UK households saying they’re open to swapping home broadband for mobile. Perceived price savings are the dominant driver, cited by 45%. Yet the fact that the inclination to switch from fixed to mobile broadband is most pronounced among more affluent households underlines that price isn’t the only factor at play. Looking across all households, 26% cite simpler installation and set-up as a perceived benefit of fixed-wireless access (FWA) broadband, up from 19% in 2023. 

How EY can help

Customers’ digital experiences must be revisited — and revitalised 

Our research shows that UK consumers are generally receptive to digital tools. Asked which elements of their digital home experience would benefit most from chatbots, 37% highlight faster issue resolution, and 28% simpler pricing information. But households still rely heavily on human assistance for customer support from their connectivity providers and content providers, with 45% preferring to phone the call centre with broadband queries, compared with just 17% favouring chatbots. However, this preference varies by age: less than one in ten aged under 25 prefer the call centre, compared with more than half aged 55 and over.

 

Meanwhile, the proportion of all consumers going to physical stores first on their path to purchase has risen from 25% last year to 29% this time, with the key rationales being the opportunities to view digital home products prior to purchase and seek advice from in-store assistants — reasons that reflect the customers’ struggle to evaluate services that they perceive as similar and make a choice. Significantly, a rising proportion (46%) don’t perceive any difference between the digital home services from different connectivity and content providers, an issue that’s especially acute among 25 to 34 year olds (50%). 

 

Consumers aged 55 and over are more likely to see introductory offers as a source of uncertainty rather than an incentive to buy. With such findings in mind, providers should note that having few distinctive features and too much detail are both sources of frustration for digital home customers. They should also look to ensure their omnichannel strategies are robust, even as they look to develop new ways to provide advice online.

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2

Chapter 2

Differing attitudes among UK consumers: seven digital home personas

The EY Global findings reveal seven consumer personas, each with their own distinct attitudes towards digital home products and services — and with UK households, the same personas can be identified.

  • Premium and pleased: This segment accounts for 14% of UK consumers. They are the most likely of all to be the sole decision-maker in their household and also the most likely to pay a premium for digital home connectivity, content and technology. Whilst they’re the most likely of all the personas to find self-service options helpful, they also have the highest readiness to pay more for better customer service from their connectivity providers and content providers. Other attributes include a strong attraction to introductory offers. 

  • Digital devotees: Making up 15% of the UK consumer base, these users are more likely to be aged 45 to 54 than other segments. They exhibit high levels of digital home adoption and are the most likely to have multidevice streaming at home. Strongly focused on Wi-Fi quality, they’re the most likely to seek improved reliability from connectivity providers. They’re also the most concerned about children accessing harmful content — and the most likely to think connectivity providers and content providers should improve their price guarantees.  

  • Informed savers: This persona accounts for 13% of UK consumers. Whilst they rank above average for value-for-money perceptions and satisfaction with overall digital home services and customer support, they’re the most likely of all the segments to spend as little as possible on broadband services from connectivity providers. Exhibiting below-average propensity to switch providers, they’re the least likely to find switching painful or pricing changes difficult to understand, and they voice above-average sensitivity to risks around privacy, security and AI. 

  • Content comes first: Accounting for 15% of UK consumers, people in this segment are the most likely to pay content providers to watch sport on TV — but also the most likely to believe that they’re overpaying for content they don’t watch. Preferring content that they find familiar, they’re sensitive to digital overload, being the most likely to seek a digital detox away from smartphones. They’re relatively more likely than other personas to find the switching process complex, and the least likely to trust broadband connectivity providers to take care of their data. 

  • Beyond the bundle: People in this segment — accounting for 15% of UK consumers — exhibit above-average interest in new technology or gadgets and a high likelihood to pay a premium. They also have the highest propensity to switch, voicing below-average satisfaction with their broadband connectivity providers and support experiences, and — in terms of content providers — are the most likely to want to cancel pay-TV and move to using subscription video-on-demand services only. They’re also the most worried about the negative impacts of being online on their wellbeing, and the most receptive to exchanging personal data in return for tailored services. 

  • Disengaged users: This segment accounts for 15% of UK households. These consumers have average levels of digital home technology adoption and are the most likely to perceive a lack of differentiation between providers. They’re also the least receptive to introductory offers and bundling propositions from connectivity and content providers. They voice below-average satisfaction with overall services and customer support, and below-average perceptions of value for money — both reflected in an above-average propensity to switch digital home providers. 

  • Drowning in digital: Making up 14% of UK households, these consumers have the highest average age and are the least likely to pay a premium. They’re also the most prone to feeling overwhelmed by the breadth of choice available in the digital home market, creating a degree of inertia that’s reflected in a below-average propensity to switch, despite their low satisfaction with connectivity providers and content providers. They’re the least likely to feel in control of their online data and the most worried about phishing or scam emails.
Two individuals standing in front of a wall-mounted smart home control panel, with one person interacting with the panel. The background includes indoor plants and blurred elements, indicating an indoor setting.
3

Chapter 3

What actions should UK digital home providers take now?

Our research at both a UK and global level points to five steps that will help content and connectivity providers to win out in today’s crowded and highly competitive digital home marketplace.

  1. Focus on your customer promise: Address consumers’ frustration and scepticism over connectivity providers’ promises by ensuring that service guarantees are meaningful and compelling — thereby boosting their likelihood to buy.

  2. Take advantage of premium service potential: Tap into consumers’ increasing receptivity to premium digital home connectivity and content offerings to justify a higher price point, whilst also focusing on ‘win back’ strategies to regain returning customers.

  3. Address consumers’ digital anxieties: Respond to customers’ rising concerns around harmful content and data security in the digital home by building trust through a more meaningful dialogue with them — whilst also engaging with industry peers and regulators to stay abreast of developments.

  4. Put simplicity at the centre of your service portfolio: Harness healthy demand for various types of digital home package — from broadband and streaming bundles to 4G or 5G home broadband — by making all service offerings easy to understand, install and customise.

  5. Instil greater confidence in digital customer journeys: To reduce users’ reliance on call centres and retail stores for purchasing and support, enhance their online journey experiences by providing improved digital tools, removing the friction in transferring support from a digital-only to a digitally assisted channel, and ensuring better combinations of agent and digital interactions — along with clearer explanations of the role played by AI.

Summary

Whilst take-up of digital home products and services is a global trend, the UK market and consumer base have some distinctive attributes. For instance, guarantees on broadband speed and Wi-Fi home coverage are particularly important when buying connectivity services. 

Also, the number of UK consumers looking to trade down to cheaper — possibly ad-funded — packages or streaming services is balanced by a similar proportion willing to pay more for extra features. 

The priority for both connectivity providers and content providers should be to gain insights into these differing consumer needs — and then develop and target propositions to fulfil them.

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    About this article

    Authors

    • Rob Atkinson
      UK&I Technology, Media and Telecommunications Market Leader, Ernst & Young LLP
    • Adrian Baschnonga
      EY Global Technology, Media & Entertainment and Telecommunications (TMT) Lead Analyst
    Related topics
    TMT
    Telecommunications

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.