![You, on Netflix](https://media.guim.co.uk/885842a675547a113878c11ee3bfac1b512eec17/0_120_3600_2160/1000.jpg)
British households stopped paying for almost 170,000 streaming services in three months of the year, as increasingly budget-conscious consumers embarked on a post-Christmas “subscription cull” that hit market-leader Netflix the hardest.
While TV fans flocked to hit shows The Last of Us, Clarkson’s Farm and You – the three most popular shows on subscription video-on-demand services in the first three months – 7% of British households cancelled at least one service in a new year spending cut.
This amounted to the cancellation of 167,000 paid-for streaming subscriptions, taking the total number down to 29.44m, according to the research firm Kantar.
Almost 145,000 households gave up on paid streaming services all together in the first quarter, as the total number of homes with at least one paid-for subscription fell from 16.24m to 16.1m quarter on quarter.
The top reason given for households cutting subscriptions in the first quarter was: “I want to save money.”
Netflix is estimated to have recorded the largest loss in absolute subscriber numbers in the UK in the first quarter of the year. Amazon’s video service proved the most resilient, helped by an annual Christmas surge in sign-ups to the e-commerce giant’s Prime subscription bundle.
“Some services were more heavily impacted by this trend [of cutting back] than others,” said Dominic Sunnebo, global insight director at Kantar’s Worldpanel division.
On Tuesday, Netflix reported the addition of 1.75 million new subscribers globally in the first quarter, below investor expectations of 2.4 million, with the Europe, Middle East and Africa region adding just 640,000.
Netflix had attempted to tackle the subscriber slowdown by launching a cheaper, ad-supported tier in November – priced at £4.99 a month in the UK – which Kantar research found has helped the streamer to slightly increase the proportion of new subscribers entering the market that it wins.
However, this strategy has so far failed to make up for total subscriber losses – the proportion of cancellations has risen as budget-conscious consumers hope to trim household spending amid the cost of living crisis.
“There has been no dramatic drop across most of Netflix’s key performance metrics, but rather, a gradual decline across almost all areas, including satisfaction with the variety of TV series, amount of original content and quality of shows,” said Sunnebo.
Kantar’s viewing research found that Netflix shows accounted for three of the Top 10 most-enjoyed titles in the first quarter – half the number in the same period last year – alongside a “concerning” drop in how satisfied viewers are with their subscription.
“Netflix consumers are increasingly questioning the value for money they get from their subscriptions,” said Sunnebo.
However Netflix, which this week announced the closure of the 25-year-old DVD by post business from which the company ultimately built its streaming empire, pointed to the $2bn of free cashflow and $1.3bn in net profit in the first quarter as evidence that its strategy was working.
Netflix also said that, as its ad-supported tier gathers momentum, and its plans to convert password-sharing households into paying customers kicks into gear, it expects “growth to accelerate over the course of the second half of 2023”.
Kantar said that the number of video cancellations in the second quarter of the year was expected to drop.
The biggest hits on subscription streaming services in the UK
The Last of Us (Sky Now)
Clarkson’s Farm (Amazon Prime Video)
You (Netflix)
Wednesday (Netflix)
The Rig (Prime Video)
The Mandalorian (Disney+)
Star Trek: Picard (Paramount+)
Ginny & Georgia (Netflix)
Tom Clancy’s Jack Ryan (Prime Video)
Unforgotten (ITVX)
Source: Kantar, figures for first quarter 2023