How often do you think about your digital cost of living?

Analysis: Subscriptions to multiple digital services add up quickly and it’s easy to forget exactly what you’re paying a monthly or annual fee for

Ireland is very much a nation of streamers. Recent stats show that we have the highest proportion of internet users paying for film, TV series or sport streaming services in the EU. But while these services have given us more content and access than ever before, the price paid is both literal and figurative. Subscriptions to multiple services add up and, unlike physical products, it’s easy to forget what exactly you’re subscribed to.

Part of the reason is how popular the subscription model is with companies, as it provides a more consistent income stream, explains Dr Emma Howard, an economist and lecturer at TU Dublin and Research Ireland awardee. “They can rely on the fact that you’re signed up. Most people are likely going to keep it for a reasonable amount of time so they can predict their revenues more easily.”

While subscriptions let you split payments instead of paying a larger once-off sum, they have drawbacks. While they may feel straightforward to track because they’re predictable payments, they’re less tangible and therefore harder to track.

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“There are a couple of behavioural biases that come into play when we think about subscriptions,” says Howard. “One is a planning fallacy or optimism bias. If you sign up for the gym where you pay €60 a month, you might plan to go to five classes so it’s good value.

“But you may only go to one class or not go at all and, weirdly, we don’t learn from our mistakes. The optimism bias may come into play where you might think you didn’t use it last month but this month you definitely will so you keep paying.”

In the case of streaming services, Howard says status quo bias can lead you to stick with default actions, even if it’s not in your best interests. Likewise, pressure from family members or kids can push people to keep services they may not use much, says Andy Caomhánach, a lecturer in Information Technology at the University of Galway.

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“With the cost of living crisis, you’ve a situation where people can feel obliged or can be pressured by kids or other family members that they need Netflix or Disney+,” Caomhánach says. “When you add it up over the course of the year, it’s expensive and will only increase.”

Ownership and licensing

Another issue with subscription services is that you can access content, but you don’t actually own it. Yet while this is expected on streaming services, the spotlight has fallen on digital products where ownership isn’t quite what it seems.

In recent weeks, a Google TV user discovered their digital purchases of The Lord of the Rings: Extended Edition trilogy had disappeared. Rockstar Games, the makers of the popular Grand Theft Auto series, announced its latest instalment will be digital-only. Shortly after, Sony announced it will stop making physical discs for new PlayStation games after January 2028.

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Both caused significant customer outcry, yet the moves showed that being the single point of access for exclusive media means your access to a game depends entirely on the vendor. While services focus on original content not available elsewhere to make them more appealing, leaving them digital only can bring other problems.

“This means the price of the games going forward will be heavily dictated by Sony themselves, as they control the entire digital ecosystem,” says Caomhánach. “And only for the duration that Sony says you can have it. Once they shut down that storefront, that game ceases to be available.”

Such developments have brought the topic of ownership to the fore. Purchasing a movie or game digitally doesn’t mean you own it indefinitely. Instead, you’re dependent on the company operating the service to continue it.

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“We’re moving more towards a world where we own very little,” says Howard. “Before you might own an extensive CD collection, but now you subscribe to Spotify, and if an artist disappears, then you can’t listen to it as you don’t own it”.

Struggling to keep track

The result is a fragmented digital landscape where consumers subscribe to more services they use less and less. Adding to the complication are trial services you sign up for but forget to cancel or the difficulty of canceling a subscription, meaning you could be paying for extra services without realising it.

“There’s a major issue where a lot of people have subscriptions that they don’t know they have, or they forget they have and don’t use,” says Caomhánach. “Unless people are actively organising their lives and keeping track of what they’re signing up to, it highlights the need to have a reminder in the calendar to cancel these services when they are no longer needed.”

There’s a major issue where a lot of people have subscriptions that they don’t know they have, or they forget they have and don’t use

Howard believes that how we think about money should shape our approach to staying on top of subscriptions. “We use a process called mental accounting where we tend to think about money and put it into certain accounts, rather than thinking that every euro in my account is fungible,” she says.

“Every euro is the same as any other, whether you spend it on rent or on a Saturday night out, but we make these mental accounts where we say we have this much money to spend on leisure, exercise, bills, or rent and divide it up.

“What happens is you think you have this much money to spend on entertainment, so you put it in that account. You think of it all separately and don’t add up total spending.”

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The views expressed here are those of the author and do not represent or reflect the views of RTÉ

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