The worldwide spread of COVID-19 has had a quick and damaging effect on the global economy, with businesses across all sectors feeling the effects thanks to operational disruptions and increased pressure on their supply chains.
However, whilst many organisations struggled to survive recent months, the popularity of subscription-based streaming services – such as Netflix, Amazon Prime and Disney+ – soared. 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 growth was also reflected in the digital news and media sector driven by increased consumer interest in news updates. In fact, our recent COVID-19 Subscription Impact Report discovered that OTT streaming subscriptions grew by 400% from March – May 2020 when compared with the previous 12 months.
The need for people to stay at home and follow government guidelines has acted as a catalyst, driving several key changes in consumer behaviour which are likely to remain post-pandemic. But how can businesses operating within this new landscape prepare and position themselves to both survive and thrive in the future?
The shift in consumer behaviour during COVID-19
Lockdown brought with it many changes in consumer behaviour. With restaurants, theatres, shopping centres and offices closed, many consumers found themselves with a lot more time to spare. To add to this, the news cycle was changing rapidly day-by-day – with important information about the virus’s spread and guidelines for the public being updated continually. Staying at home meant that online outlets and TV streaming services became the number one source of news and entertainment for many individuals.
In 2018, it was predicted that by the end of 2020, 50 percent of adults in developed countries will have at least four online-only media subscriptions. Since then, the subscription economy has boomed and it feels as if we’re more than on target to hit that figure. In fact, thanks to the rise of streaming-based services such as Netflix, adding more than 10 million subscribers in the previous three months, media moguls are now looking at a new total of 26 million subscribers in 2020, according to a recent report by Ofcom.
And it’s not just media and streaming services that have thrived during this time. Other subscription-based businesses have also found themselves coming out on top. Those operating within the e-learning space, for example, have witnessed 80% growth as schools and other educational establishments closed their doors.
In fact, our COVID-19 Impact Report found 50% of all subscription companies 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. But, the media industry is 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 subscriber relationships
For digital media businesses who 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.
Flexibility should be one area that is high on the priority list. The ability to opt-out or even just temporarily suspend a service is seen as a really important factor. Research from the Subscribed Institute, a think-tank for the Subscription Economy, shows that companies that allow customers to make changes to their subscriptions through the service grow faster than their peers. Additionally, companies offering customers the option to suspend a subscription have a 5% lower annual churn rate. Therefore, media and publishing businesses looking to capitalize on a subscription-based model need to put the customer in the driving seat and ensure that they feel in control. After all, they’re not simply purchasing a one-off magazine, they are committing to a relationship with the brand.
Another key area to focus in on is convenience. It’s important to remember that the delivery mechanism for the subscription must be more convenient than traditional purchasing. It must take the pain out of consumer viewing – removing paywalls and recurring ads. The most popular subscriptions will save time and enhance customer accessibility.
Customisation is the final defining factor which enables a subscription service to stand out from its competitors. Consumers have higher expectations for a subscription model than they do with a single purchase and it’s important to meet these. Taking unique preferences into account – for example, recommending new television shows or articles based on recently consumed content – is likely to enable businesses to build a better relationship with their customers, encouraging a longer commitment and lessening churn.
Using subscriptions to future-proof your business
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. Once these models are adopted, focusing on adding value and improving the overall experience for customers will prove critical for building and retaining loyalty long term. If businesses are able 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.
General Manager, EMEA at Zuora
Zuora creates cloud-based software on a subscription basis that enables any company in any industry to successfully launch, manage, and transform into a subscription business. The company employs more than 800 staff and is headquartered in San Mateo, CA, with satellite offices throughout North America, Europe, China, India, Japan, and Australia.