Australian households spend $4,500 a year on entertainment, with streaming and gaming taking biggest slice

Australians are spending more than ever on entertainment, internet access and media, with streaming services such as Netflix and gaming taking up the largest slice of the $45.6bn entertainment pie.

Perhaps due to lockdown habits, spending was up 6.23% in 2021 and by the end of the year the annual household spend will have increased by $510 per year since 2019, according to PricewaterhouseCoopers’ Australian Entertainment and Media Outlook.

Over 75% of households were paying for a streaming service in 2021, which is expected to rise to over 80% by the end of 2022.

Households are spending a total of $4,500 a year on internet access, subscription TV, gaming, social gaming, cinema, news media subscriptions and printed newspapers, podcasting, books, magazines, music and live events.

Professor of digital communication and culture at the University of Sydney Terry Flew said the amount we spend on entertainment is often hidden because we pay monthly and don’t consider the annual cost.

“Many of these services are an automatic monthly deduction, which people don’t take notice of as much as they would if they were to make a one-off physical payment,” Prof Flew told Guardian Australia.

“It’s the genius of the model. Paying for entertainment has become the norm for the majority of people although there is a caveat to that – are we going to be able to continue to afford to pay for it all?”

Despite a tradition of not paying for television under the free-to-air model, Australians have embraced the subscription television model and continue to add services as they become available, he said. And increased access to digital entertainment such as gaming and social gaming has just grown the amount of discretionary income we’re prepared to spend on entertainment.

While the first lockdowns sparked a drop in spending as cinemas and live events shut down, the second Covid wave in 2021 saw consumers turn to entertainment and media to help alleviate boredom in extended lockdowns.

Although it still reaches 12.8m people in Australia, Netflix is facing challenges. The streaming service has announced international plans to launch a cheaper service – giving subscribers the chance to pay less in return for viewing ads – after reporting the first loss of subscribers in a decade.

The average household pays for 2.3 subscription television services, spending $40 per month on them in 2021, rising to $55 when all forms of entertainment subscriptions are included, PwC said.

The Australian Communications and Media Authority (Acma) quoted the same figure in a recent report, which said people are spending $55 a month on entertainment subscriptions as we turn away from free-to-air.

Flew said the streaming services are facing another challenge in the form of looming legislation to force them to spend at least 20% of their local revenue on Australian content, including drama, documentaries and children’s programs – as recommended by a parliamentary report last year.

PwC Australia’s director and outlook editor, Dan Robins, said $4,500 seems like a lot but it covers more than just entertainment.

“There’s also the utility spend in terms of the internet access,” Robins said. “Most households are spending over $100 a month, which adds up to well over $1,000. And then when you then add in the top price of Netflix, which is now $22.99 a month, it sort of adds up. Then there are products like books and then there’s people buying games and then spending money in games as well.”

The report says Australians now have 6.5 subscriptions from a possible 115 available across video-on-demand, audio, news and lifestyle content, gaming and other sources of entertainment.

According to Optus research cited in the outlook, the number of subscriptions per household is forecast to grow to 10 in the next five to seven years.

In podcasting, the comedy genre overtook true crime and news to become the most popular of 2021, signalling an increasing demand for light-hearted content.

Printed newspapers continue to decline but digital subscriptions and digital advertising is growing.

In the news media sector, printed circulation revenue will drop 3.7% by 2026 to $582m and print advertising revenue will drop by 6.0% to $518m, while digital advertising revenue is expected to grow by 2.7% to $458m and digital subscriptions will grow 8.2% to $613m. The Guardian