What TMT leaders need to know about consumer preferences in 2023

Amid significant business transformation, including pricing competition and other key challenges, companies across the tech, media and entertainment, and telecommunications (TMT) sector are seeking to streamline operations, reduce costs and create long-term enterprise value. To achieve the latter, many leaders across the sector (media and entertainment (M&E) executives in particular) are focused on consumers’ evolving preferences and their desire for unique, engaging experiences.

With these and other factors in mind, Ernst & Young LLP (EY US) recently deployed the 11th edition of the US Future Consumer Index to understand what matters most to consumers across a range of topics this year. Below are a few key insights from this year’s survey that will be of particular interest to TMT leaders.

Consumer sentiments and concerns

As talk of a possible recession persists, this year’s survey understandably found that 95% of US consumers are concerned about the economy. Drilling down further, we also discovered that more than half of those surveyed were extremely concerned about both today’s cost of living (58%) and where it will be three years from now (54%). Of note for the TMT sector, these worries are likely impacting consumption habits, with 62% of survey respondents saying that they did not feel the need to keep up with the latest technologies.

The US Future Consumer Index survey results also yielded some interesting insights into institutional trust. The number of respondents who stated that they completely trust institutions is low overall, with health care companies garnering the highest response rate of all industries at 17%. By comparison, the TMT subsectors fared as follows:

• 11% completely trust technology companies.
• 7% completely trust entertainment companies.
• 7% completely trust media companies, while 66% say they have minimal trust in them (the highest rate of response for minimal trust across all industries)

While these figures may be less than stellar, they also demonstrate that TMT companies have an opportunity to reimagine their value proposition by placing consumers at the center (discussed in more detail below).

Inflation and spending

At the time of the survey, respondents told us that elevated food and energy expenses were impacting their homes more than other cost pressures, and they anticipated this to continue over the next six months. But 49% of survey respondents also believed that prices for consumer electronics would see similar increases over the coming six months. In addition, 36% of participants indicated that they would spend less in this area over the three- to four-month period following the survey. ?

With regard to subscription video streaming services, 80% of US consumers expect to spend less or about the same over the next three to four months, potentially signaling greater subscriber churn for streaming providers or consumers’ pivoting to lower-cost, ad-supported alternatives.

Products and channels

Looking closer at current subscriptions, we found that 69% of US consumers subscribe to video streaming services, 34% to audio services and 22% to gaming services. And while most respondents noted that they plan to continue these services, a significant number of those surveyed said that they will reduce or cancel the number of subscriptions (response rates were above 20% across every service type). Meanwhile, just 5% of respondents indicated that they planned to increase the number of video streaming subscriptions they use in the near term.

As for their expected use of online services, consumers seem to be sticking with what they know. For example, survey participants said that over the next six months they planned to consume video streams (55%), audio streams (50%) and online games (42%), while consumer interaction with augmented reality experiences (10%) and virtual reality experiences (10%) remains limited.

Our survey also demonstrated that regardless of their preferred channels and consumption habits, US consumers perceive risks when engaging online, with a majority indicating that they were either moderately or extremely concerned about data usage and digital safety issues.

Key takeaways

As the above insights show, while consumers have major concerns about cost pressures and the resiliency of the US economy, these issues haven’t always prompted them to curtail TMT-related spending in significant ways. To demonstrate value and meet consumers where they are, we believe the following actions will be key for sector leaders:

1. Provide connected consumer experiences. Take an omnichannel approach to consumer engagement by bundling products and services to drive customer acquisition and retention.
2. Cater to the consumer of one. Remember that each consumer has unique desires and preferences; leverage data appropriately to increase personalization.
3. Deliver on the consumer promise. Use leading technologies and enhanced operating processes to streamline and improve service and safety throughout the customer journey.
4. Remember that price matters (a lot). Develop agile pricing strategies and incentives that articulate the total value proposition in the context of a highly competitive marketplace for consumer spending and attention.

Summary

As TMT continues to navigate change and the economic conditions that are impacting operations, it’s important for sector leaders to continue taking a consumer-centric approach. Those who focus on driving cost savings by streamlining front- and back-office operations while providing engaging experiences will be best positioned to meet consumers where they are in a consistent manner, which ultimately enables long-term value creation.