It has been reported that the average consumer spends around £40 to £70 per month on subscription services. Whether it’s Netflix, Spotify or Hello Fresh, subscription costs can sometimes go up to £786 a year for the average person.
A large part of this huge cost may be due to the difficulty of canceling a subscription. We’ve all been there. You try to cancel a subscription and have to go through 10 different steps to confirm that you want to continue before you can finally complete the process.
New laws are now set to come into force that will make it much easier for customers to cancel subscriptions. This is intended to prevent “subscription traps” that lock people into long-term subscriptions and potentially save consumers “around $400 million per year.”
This article examines what exactly these new laws are and how they may impact businesses that rely on subscription fees, such as streaming services.
What are these new laws?
The new laws are set to come into effect in spring 2027 and will allow people to cancel subscriptions with just one click, making signing up just as easy. These companies also need to be more upfront with their customers about when the “trial period” ends so they don’t accidentally sign up for a year-long, expensive contract without them realizing it.
If a customer forgets to cancel their free trial before it becomes a full subscription, there is a “14-day cooling off period” during which they can receive a full or partial refund. Which?’s head of consumer rights policy, Sue Davis, explains that these new guidelines will “help put consumers in control through appropriate transparency and protection.”
It has been reported that around 3.5 million in the UK are unintentionally switched to long-term contracts after signing up for a free trial, and 1.5 million are caught out by automatic renewals. These new laws were put in place to prevent these types of accidents for customers.
How will these laws affect streaming services?
How these new laws might financially impact services that require subscriptions remains to be seen. For example, streaming services’ revenues are heavily driven by their subscription models, so platforms like Netflix, Disney+ or Amazon Prime may suffer a setback.
High cancellations undoubtedly impact stock prices, and with a CFD broker you can get a closer look at the market’s fluctuations in real time. These services will need to find new ways to maintain a “positive average revenue per user” to avoid having too much of an impact on stock prices.
In recent years, Netflix has experimented with different ways to manage users’ subscriptions. They have moved from subscriber growth to an approach that maximizes revenue. For example, in 2023-2024 there was a crackdown on “password sharing,” which required the use of all accounts within a single household.
Although controversial, the move was ultimately a financial success for Netflix, which gained millions of new sign-ups as a result. This has also helped them gain 300 million subscribers worldwide by 2025. Now, with “subscription traps” tackled, can streaming services find ways to achieve significant growth in difficult circumstances?
