Market growing and an improving consumer experience: What we’ve learnt from this year’s annual market review

13 August 2020, Simon Towler, Director of Policy and External Relations

Conducted for us by Analysys Mason, the Annual Market Review 2019/20 (AMR) provides an overview of the phone-paid services market, including size, key trends and consumers’ experiences. Here are some of the insights from this year’s research. 

The market is growing 
One of the key findings from our new AMR is that the phone-paid services market has outperformed expectations, growing to £646.1 million in FY2019/20. That’s 2.4% higher than in FY2018/19.

This growth is driven primarily by consumers spending more on services using premium SMS messages, most significantly on TV and radio competitions. 

Premium SMS isn’t the only spending channel to grow this year. The AMR also finds that spend on operator billing and voice-based services on 09 numbers increased, up by £4.6 million and £9.6 million respectively.

AMR 2019 2020 end user spend by spending channel

This growth wasn’t felt by all corners of the market. Consumer spend on charity donations decreased by £9.5 million, although this was to be expected because biannual telethon events like Red Nose Day didn’t fall in 2019/20. And consumer spend on voice-based services beginning with 087 and 118 also declined, driven by the availability of cheaper or free alternatives and the consumer protection price cap on 118 services introduced by Ofcom in April 2019. 

Growth looks set to continue 
Analysys Mason expects the phone-paid services market to grow slightly in 2020/21, generating an estimated £657.4 million in consumer spend (up 1.7% from 2019/20). 

The Covid-19 pandemic is anticipated to  have an impact here. With more people spending time at home during lockdown, there may be increased consumer spend on competitions at the beginning of 2020/21. This may also be the case for charity donations, with the BBC’s Big Night In in April raising more than £10 million in phone-paid donations. 

However, the AMR forecasts a “displacement effect”, with increased spend at the beginning of the year being followed by a decrease towards the end of the year. This is expected due to the likely economic downturn caused by the Covid-19 pandemic, which may cause hardship for many families towards the end of the financial year, with the result that some people may be less willing and/or able to use phone-paid services. 

Beyond 2020/21, Analysys Mason forecasts that the market will take a 1.5% dip in FY2021/22, because of the economic fall-out of the pandemic. But things will likely pick up again the next financial year, with the market forecast to reach £667.5 million (that’s a 3.1% increase year on year).

AMR 2019 2020 end user spend by type

Consumer satisfaction is improving
Alongside market growth, another positive from the review is that consumers are becoming more satisfied with phone-paid services.

Analysys Mason surveyed 5,000 phone-paid service users as part of the review. The AMR uses the industry-standard Net Promoter Score (NPS), which is used to measure consumers’ willingness to recommend products and services to others. The phone-paid services industry has an overall NPS of -17, a significant improvement on the -26 figure from last year. Some services have positive NPSs: charity donations (3) and entertainment services (3).      

Regulating a changing market
While we’re pleased to see that things are moving in the right direction, there’s clearly still room for improvement to ensure more consumers have a positive experience when paying for content and services on their phone bills.

Changes that we’ve recently made to our regulation are already beginning to pay dividends here. We tightened up our rules around subscription services at the end of 2019, for example – this has led to a much-needed reduction in consumer complaints to us about subscriptions and is expected to continue to have a positive impact in the medium term. 

Consumers’ interests will remain front and centre this year as we undertake the biggest review of our regulatory framework in a decade. Our aim is to develop a Code of Practice that builds public trust and confidence in the market by driving up standards of conduct and boosting consumer protection, and reflects a market that is constantly evolving.


Fast facts

  • More than half (52%) of UK adults used at least one phone-paid service last year.

  • Half of people report that convenience is the main reason for using phone-paid services, followed by price (46%) and impulse purchasing (45%).

  • Consumers spent more money on TV and radio engagement (£146.1 million) than any other category, closely followed by games (£146 million).