How Media Businesses Can Use Subscription Models to Maintain Resilience in Our Post-Pandemic World
Among the many behaviour changes wrought by COVID-19 is the way people consume content. John Phillips looks at how subscription-based models can build on the success they’ve seen in recent months.
In just a matter of months, the COVID-19 crisis has had an unprecedented and lasting impact on every aspect of our lives. The way we work, the way we entertain, the way we socialise have all changed beyond recognition. The need for people to stay at home, socially distance and follow government advice has driven several key changes in consumer behaviour that are likely to stay post-pandemic.
Content consumption patterns are changing
One of these changes is around how individuals consume content. Whilst the traditional entertainment industry has struggled to survive the pandemic, subscription-based streaming services, such as Netflix, Amazon Prime and Disney+, have seen a significant uptick. In fact, a recent Ofcom report discovered that consumers in the UK spent an average of six hours and 25 minutes a day watching TV during lockdown, with 12 million people deciding to join a service they hadn’t used previously.
This boost was also reflected in the digital news and media sector, driven by increased consumer interest in news updates and a desire for information during this time of uncertainty. In fact, the COVID-19 Subscription Impact Report from Zuora discovered that OTT streaming subscriptions grew by 400% from March to May 2020 when compared with the previous 12 months.
But, with the economy still feeling the effects of the pandemic, media businesses need to act now in order to capitalise on this current growth and ensure success in this new landscape and beyond.
The rise of media subscriptions during COVID-19
In 2018, it was predicted that by the end of 2020, 50% of adults in developed countries would have at least four online-only media subscriptions. Since then, the subscription economy has thrived and Brits are well on track to hitting that figure.
The COVID-19 crisis accelerated this growth even further. With restaurants, pubs, theatres and shopping centres temporarily closing their doors, consumers found themselves with a lot more time to spare. The need to stay at home and limit the spread of the virus meant that, for many individuals, online outlets and TV streaming services became the number one source of news and entertainment. In fact, Netflix alone reportedly added more than 10 million subscribers to its streaming platform in the last three months. Meanwhile, Disney+ recently reported it had reached 60 million subscribers in just nine months, thanks to a boost brought on by the pandemic.
And it’s not just media and streaming services that have thrived in this time of uncertainty. Our recent COVID-19 Impact Report also found that 50% of all subscription companies across all industries have continued to grow as fast as they were before the pandemic. On top of this, 18% are even seeing subscriber rates accelerate, highlighting the resilience of the subscription economy.
Whilst many other businesses have lost income during this time, those with subscription models have managed to retain and even grow their customer bases. But, we’re not out of the deep end just yet. Those adopting subscription-based models still need to take several steps to ensure that they are a success long-term.
Maintaining customer relationships through subscriptions
For digital media businesses which have adopted a subscription-based model, the next challenge will be pivoting from subscriber acquisition to subscriber retention. With a subscription business model, companies have more levers at their disposal and should be leveraging rich customer data to curate creative pricing and positioning strategies – like bundling – to entice customers with tailored content offerings. This is particularly important as companies begin to adopt large recurring revenue streams and rely less on advertising revenue.
Moving forward, media businesses also need to focus on ensuring both flexibility and convenience. These are the areas that are likely to set your business apart and encourage brand loyalty. Today’s consumer wants to be put in the driving seat – the ability to easily opt out or even just suspend a service is important and those that offer it typically grow faster than their peers, according to research from the Subscribed Institute. Consumers also want a service that takes the pain out of traditional viewing and purchasing. This means no paywalls or recurring ads, just total accessibility.
Customisation is crucial as it enables a subscription service to stand out from its competitors. Consumers have higher expectations for a subscription model than they do for a single purchase. Taking unique preferences into account is likely to enable businesses to build a better relationship with their customers, encouraging a longer commitment and reducing churn. Once these models are adopted, focusing on adding value and improving the overall experience for customers will prove critical for building and retaining loyalty for the long term.
Due to their resilience, ability to rapidly scale and the recurring nature of revenue, subscription-based business models are becoming increasingly popular with digital media businesses. If businesses are able to capitalise on these models now, using them to deliver the right blend of flexibility, convenience and customisation, subscriptions could become the key to surviving the current climate whilst preparing for the future landscape.