Are Subscription Services Ruining Your Monthly Budget?

Posted on July 8, 2021

Subscription services are everywhere. Whether you want a haircut or access to your favourite television shows, there's likely a subscription attached to it. In recent years, the subscription model has become a ubiquitous part of most people's daily lives. 

Want to watch Friends for the thousandth time? Unless it just so happens to be playing on cable TV, you're going to need a Netflix account. 

Interested in listening to music on the subway but you don't have a data signal? Unless you pay for Spotify Premium, you can't listen to anything without an internet connection. 

The problem with so many digital subscription services is the cost. Each and every one of them costs a certain amount alone, and paying monthly dues for multiple ones adds up over time.

But is it worth the cost, and what can you do to save money?

Popular Subscription Streaming Services

Subscription models aren't exactly a new invention. They've existed for a long time in the form of monthly or annual payments for services, such as your cable bill. The difference now is that an increasing number of them are getting created to capitalize on the accessibility of the internet.

Netflix

netflix website screenshot

Once upon a time, Netflix was an at-home video rental company. You would go onto their website and order a certain amount of DVDs you wanted, and they would ship it to you. There was no streaming service whatsoever. 

Video streaming wasn't introduced until 2007, nine years after the website first launched. It was one of the first digital subscription services to offer access to television shows and movies.  

As of 2021, Netflix has over 75 million app subscribers in the US and 13 million in the UK. Worldwide, that number was over 200 million in 2020.

Amazon Prime Video 

amazon prime video website screenshot

Amazon Prime Video has over 50 million in the US alone. The market for global video streaming is predicted to grow by 23.2% between 2020 and 2025 according to the Media Streaming Market.

Other Popular Streaming Services

spotify website screenshot

Since then, the model has been applied to various other industries. Music subscriptions started popping up, including but not limited to Spotify, Pandora, and Apple Music. You would also see fitness subscriptions and apps subscriptions become the norm. 

Originally, you could stream music for free using websites like Pandora and Youtube. However, Spotify revolutionized streaming by partnering with artists directly. Even though there's still a free listening option, you unlock extra options if you subscribe to Premium. 

Additionally, Spotify has partnered with other online tech companies to offer package deals. Purchase Spotify Premium and you also get access to Hulu and Showtime. 

The problem with all of these digital subscription services is that an increasing number of companies have adopted the model to make a profit. Now, there are many different offerings that serve the same purpose. 

For Netflix in particular, this meant that popular television shows and movies were getting taken down and moved to another, separate subscription service. If it was something you liked to watch, you'd now have to pay another company for access to it. 

If you want to watch TV, just a few of your options are Netflix, Crave, Amazon Prime, Disney+, Peacock, Showtime, and HBO Max. Assuming they cost $5 each, you're looking at $40 a month, not including the costs of your other subscriptions. 

As a result, a lot of people subscribe to multiple websites at the same time. Although video streaming websites may have original content to differentiate themselves, not all subscription services can say the same.

Spotify, Apple Music, and Youtube Music are all music subscriptions that offer access to your favourite artists and albums. However, they all offer the same artists and albums. There's very little reason to subscribe to more than one at a time, and yet millennials have been shown to do so.

The influx of streaming services has also resulted in unique models getting pushed, like Philo. For $20 a month, you get over 60 television channels available for streaming. It simulates standard cable television without a cable subscription. 

Subscription Services Cost More Than You Realize

Even though subscription services aren't terribly expensive on their own, it adds up when you consider how many there are. You have app subscriptions, music subscriptions, fitness subscriptions, grocery delivery subscriptions, and more. They automatically renew every month, so they may have a bigger impact on your budget than you'd think. 

Even worse, most people sign up for monthly payments as opposed to annual payments, because $10 a month sounds much more manageable than $120 for the year.

However, those monthly payments can mean losing money at a time when you're really strapped for cash. You're much better off paying for the entire year in the beginning if you can afford it rather than assuming you'll be fine later on.

Subscriptions Can Really Add Up

Let's consider the costs of some of the video streaming services the average Canadian will use. 

The starting cost for a month of Netflix is $9.99. Amazon Prime costs $7.99 every month unless you have an Amazon Prime membership which costs $12.99. YouTube Premium, which is one of the priciest options, will set you back $11.99 every month for a single stream option. 

Since every subscription service offers original content that the others won't have, you could end up paying quite a bit for complete access to everything you want to see.

For example, a person might have three video streaming subscriptions, one music subscription, fitness streaming subscriptions, and a podcast app that they pay for. Totalled up, they could easily spend over $60 every month on the most basic offerings. 

Comparatively, Canadians spend on average $50 on paid television services every month. 

Originally, the appeal of online streaming was saving money for similar content to cable television. Assuming you pay for multiple streaming sites, you'll now likely pay similar prices for both. 

As a result, people have taken to sharing accounts to save on money since most video streaming subscriptions allow multiple instances of simultaneous usage. This has led to Netflix, Amazon Prime, and other websites creating family accounts that cost a little extra for an entire household to use.

Recently, Netflix has cracked down on password sharing by requiring users to verify their accounts through email or text. All because people were trying to pinch some pennies.

How to Manage Your Subscription Budget

It's important to find a balance between getting the entertainment you desire and saving money for your future. You don't need to break the bank as long as you work your subscriptions into your budget. 

One of the first steps of proper financial planning is limiting unnecessary spending. In this case, what subscriptions do you not take advantage of?

For example, Disney+ offers the latest Marvel movies and television shows in addition to their normal children's offerings. If you're only interested in the Marvel shows, you may be better off halting your payment after you've watched them and renewing when the next one comes out. 

You should also take a look at your watch time. If you almost never open up Crave, then it's probably not worth your money to keep it around. 

Consider free month offers as well. Crave is one streaming service that sends out free trial offers for new and eligible returning subscribers. It's a great option if you want to catch up on some new shows and leave, or if you want to see if they're worth subscribing to. 

If you do choose a free trial, remember to set a reminder to cancel it. More often than not, these websites implement an automatic recurring payment in advance. Don't get caught off guard by an unexpected amount showing up on your credit card statement.

Although it's frowned upon, your best option is to share your subscription accounts with your friends. This is best done through a family or premium account. 

Netflix's most basic subscription costs $8.99 for a maximum of one screen. However, the premium subscription at $17.99 a month allows up to four screens to watch different shows at the same time. Split it with three of your friends, and you're each paying $6 a month. 

Managing the Cost of Digital Subscription Services

No one can deny how useful it is to have all your favourite shows available for streaming at your own convenience. You don't have to worry about ads or finding time to sit down when a new episode premieres. Your phone plays the music you want when you want it. 

Be wary, however, of the costs of convenience. Paying for multiple digital subscription services adds up every month you have them.

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