When considering the cost of streaming, should we include the price of the internet connection?

By Simon Anderssen, head of 22seven Insights

Last month, we published a newsletter titled?‘DStv vs Streaming’, where we showed how the satellite giant is losing ground to internet upstarts among our 22seven user sample.?

In a discussion with one reader, the topic was raised about whether or not the spend on a home internet connection should be included when considering the?real?cost of streaming.

We already have a?good picture of the home internet market. Monthly spend increased sharply during the Covid pandemic as people working from home were forced to upgrade the speed of their lines. In the first quarter of 2022, the median spend on home internet by 22seven users was R797 per month. This is no small amount and it’s easy to see why the DStv defenders claim it should be lumped in with the cost of an internet entertainment subscription like Netflix or Disney+.

But the reader’s question got us thinking about whether we’ve reached a stage where home internet is seen as a must-have by consumers –?a ‘sunk cost’ that they’d pay for regardless of whether they subscribe to a streaming service or not.?

To investigate this, we surveyed more than 2,000?22seven?users?and asked whether they’d keep paying for home internet even if they cancelled streaming.?

The results were illuminating…

The vast majority of respondents were unequivocal in their response: Yes, they would keep paying for home internet regardless of streaming subscriptions. This paints a clear picture of the perceived importance of an internet connection at home.

Of course, only certain households can afford to consider home internet a non-negotiable essential. The 22seven users who are most likely to pay for home internet regardless of streaming are generally in higher-income brackets, they work from home, they own their home or?they have secure employment.??

In the R30k+ pm income bracket, 94% of respondents said that they would keep their home internet connection. However, it was interesting to note that the figure was not much lower in the sub-R30k pm income bracket: 87% of respondents in that category also said they’d keep their internet connection regardless of streaming. This suggests that the idea of home internet as a sunk cost predominates in middle-income households, too.

So, there you have it.?The cost of home internet is something that consumers seem willing to pay for even if they cancel streaming or they have no intention of signing up for a streaming service.??

Did you enjoy this?Nugget? We’d love to hear from you. We value debate and we always enjoy engaging with our audience. Keep the feedback coming! Let us know which category of consumer spending you’d like us to investigate, and we’ll run the numbers.?

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