Groceries, gas, or Netflix? Gen Zers are dropping their streaming subscriptions as inflation hits. (2024)

Last year, by shedding his premium Netflix subscription and ad-free live TV membership with Hulu, McMiller trimmed nearly $100 from his monthly budget.

Canceling the subscriptions meant sacrificing entertainment that provided "comfort" and staved off monotony during the coronavirus pandemic, McMiller said. But as inflation drove consumer prices up by their highest levels in four decades, according to the Bureau of Labor Statistics, McMiller became one of a growing subset of younger viewers reining in spending by ditching streaming subscriptions or trading down to more affordable tiers.

Insider spoke with five millennial and Gen Z consumers who blamed soaring inflation for driving them to cut subscriptions in favor of essentials like gas or groceries.

Some younger viewers said they'd gladly traded pandemic TV binge-watching habits for social and outdoor activities. Others said they were open to renewing — but probably just to watch a few new shows or movies before canceling again.

Research released in mid-April by Deloitte illustrates what this phenomenon means for streamers.Nearly a third of millennial respondents (32%) and 30% of members of Gen Z said they'd canceled at least one paid entertainment subscription within the past six months to save money, the firm's 2023 Digital Media Trends survey found.

Researchers analyzed five demographics: Generation Z, millennials, Gen X, boomers, and mature individuals. On average, consumers spend $48 per month on streamers, Deloitte said. Overall, 44% of total respondents canceled a paid entertainment subscription within the past six months, including for reasons unrelated to cost savings.

That's the highest level Deloitte has recorded in nearly five years of tracking streaming consumer churn, according to Kevin Westcott, a vice chair who leads the consulting giant's US technology, media, and telecommunications practice.

The US is experiencing "unprecedented inflation," Westcott told Insider.

"When you go fill up your gas tank or your friends go to the grocery store, it costs more than it ever has before," he added, noting that workers' wages haven't kept pace.

While 88% of households continue to pay for a streaming video subscription, according to the survey, increased churn could generate pressure for streamers hoping to convince Wall Street that viewership is still heading up and to the right, experts said.

Streamers are prioritizing profitability over subscriber growth — but churn threatens both

Historically, subscriber growth was paramount for streamers, Westcott said, "butnow the financial markets are looking at how profitable these businesses are."

Netflix and Disney+ introduced less expensive, ad-supported offerings in 2022 in a bid toattract new users and create additional revenue streams. But their ads businesses are growing slowly, and these cheaper offerings have cannibalized some younger customers away from costlier tiers. Eighteen percent of millennials and 16% of Gen Z-ers said they had swapped higher-cost ad-free subscriptions for ad-supported versions of the same services in the past six months, the survey found.

Meanwhile, 31% percent of millennials and 21% of Gen Z-ers canceled at least one paid subscription and replaced it with a separate, free ad-supported service instead.

Deloitte's survey — the 17th edition of its annual Digital Media Trends report — was basedon findings from an independent research firm that polled 2,020 US-based consumers in November. It also covered topics including gaming and online communities.

Millennials, born between 1983 and 1996, on average spend the most of any demographic on streamers: $54 per month, Deloitte said. Regardless of why they canceled, theyexhibited the greatest churn of all five demographics with 62% cutting the cord on at least one paid subscription in the past six months, the survey determined.

Gen Z-ers, born between 1997 and 2009, were the runners-up with a 57% churn rate over the same period.

Older viewers appear to comprise streamers' stickiest constituencies, the survey found. Churn among membersof Gen X — those born between 1966 and 1982 — was 43%; it was 24% among boomers and mature individuals. Deloitte said boomers were between 1947 and 1965; and matures before or up to 1946.

Westcott pointed to younger viewers' technological savvy and limited discretionary funds as reasons they might be more prone to canceling subscriptions than members of older generations.

Across the board, disenchantment with streamers' fees and content has been ticking up. A 2022 J.D. Power surveyfound consumers were especially weary of multiplying bills — 60% of streaming households had racked up at least four subscriptions, respondents said.

And an analysis for Insider in April by data and analytics firm Diesel Labs substantiates the notion that younger viewers are increasingly contemplating reducing subscriptions.

Diesel Labs found that, on Twitter, mentions of phrases about canceling or intending to cancel a streamer rose by 17% between the first quarters of 2023 and 2022, versus 11% between the first quarters of 2022 and 2021. Gen Z users comprised nearly a third (30%) of those who referenced cancellation.

Some younger viewers would renew a streaming subscription for a hot show, but not forever

Fewer than one-fourth of viewers (24%) canceled and later reactivated a subscription within the past six months, Deloitte found — a practice the industry calls "churn and return."

This year, professional photographer Kelly Shoul, 33, and her husband, Alex, 34, culled multiple subscriptions,including Paramount+, Hulu, Audible, and Apple TV+, freeing up about $50 per month. And they're not missing them yet, Kelly Shoul told Insider.

The extra cash helps offset the soaring price of dog food — large bags have gone up about $20 each, she said — for the Colorado couple's two dogs, Olive and Hamilton.

"In recent months, the prices of everything have really just opened up our eyes," she added.

One factor could entice the couple to renew Apple TV+, at least: the upcoming sophom*ore season of their favorite drama, the Emmy- and Writers Guild Award-winning "Severance."

But once they've finished watching season two, the couple may also be through with their renewed subscription, Shoul predicted.

"We'll probably binge it," she said. "Then, we'll probably cancel it."

Do you work in the entertainment industry? We want to hear from you. Reed Alexander can be reached at [email protected], or via SMS/the encrypted app Signal at (561) 247-5758.