Subscriptions Growing Despite Threat Of Downstream Churn

Subscriptions of every description are set to the beachheads of commerce over the next year or so in a frenzy of monthly boxes, streaming entertainment services and educational media.

Containing much expert insight on the topic, PYMNTS latest Subscription Commerce Tracker®, Digital Media And Publishing Subscription Trends Edition, done in collaboration with Recurly, examines the growth prospects for subscription services as the digital shift keeps on shifting.

“Some of this growth is being driven by the digital media, streaming and publishing services industries as many consumers who are social distancing seek outlets that can help them stay entertained and abreast of news developments,” per the new Tracker, “especially those related to the current health crisis. The New York Times witnessed 14 percent growth in its most recent quarter, with its total number of subscribers reaching a record 5.7 million.” PYMNTS’ most recent Consumer Subscription Retail Services Report found that digital media subscriptions rose by 10 million between February and July, totaling 25 million.

That recent report also said this: “[Roughly] 13.4 percent of subscribers — or 24.4 million consumers — intend to cancel their services once the pandemic ends, and the share of digital media subscribers who plan to do so is even higher at 17.5 percent.”

Churn. It’s the kryptonite of subscription merchants and brands, so keeping subscription offerings fresh and frictionless will help determine their long-term economic super-powers.

Read All About It, Online

That more people subscribed to digital editions of the nation’s “newspapers” during lockdowns is a testament to the craving for information, a dash of boredom and some disposable income.

“The belief that newspaper outlets and traditional media conglomerates may be on the outs was put to rest this year as consumers sought trusted sources for the latest developments on the COVID-19 crisis and its economic impacts,” per the new Tracker. “Major players from Dow Jones and The New York Times to the Chicago Tribune have reported significant spikes in new digital subscriptions as a result, successes that were no surprise to Jeff Litvack, CEO and senior editor at New York-based advertising trade publication Adweek. Litvack noted how companies have seized the subscription revenue opportunity by investing in producing quality journalism rather than focusing on advertising sales.”

Quality programming is holding media subscription churn at bay, for now. As Danielle Gotkis, senior vice president at Recurly, told PYMNTS, “The number of consumers who are at risk of canceling their services once the pandemic recedes is 24.4 million. That number could strike fear in the hearts and bottom lines of subscription-based businesses around the globe — but let’s unpack that stat and see what’s really happening. Since the pandemic began, 15 million new subscribers have begun subscriptions, and 96 million new subscriptions have been added. About half of new subscribers say they are very likely to keep their subscriptions once the pandemic ends.”

Gaming Plays Its Part In Subscription Expansion

Another hot frontier in subscriptions is online gaming, which is branching out into eSports and a variety of directions as virtual gaming fills in the void left by the loss of live league sports.

“Video game services are an established part of the subscription entertainment space, but one new analysis reveals that they will likely become even more dominant. The report shows that the industry is expected to grow from $6.6 billion this year to $11 billion by 2025. Digital subscriptions are gaining traction even as one-time purchase titles for Xbox Live and PlayStation Plus remain immensely popular,” the Tracker states. “Microsoft provides an Xbox Game Pass subscription priced at $10 to $15 monthly that offers access to 100 games playable on its consoles, computers and Android devices.” Other services “including EA Play and PlayStation Now, are providing similarly robust revenue streams, and the report found that more than 60 percent of subscription growth is anticipated to take place in the U.S. and China.”

Even with the constant menace of churn, subscriptions are seen as resilient.

Per the Subscription Commerce Tracker®, “A new study from Geneva-based nonprofit foundation the World Economic Forum (WEF) found that businesses would do well to make moving to subscription models a priority during the COVID-19 crisis. WEF cited research showing that [subscription] firms are outperforming their eCommerce peers, with subscription services companies witnessing a 12 percent increase in Q2 while their S&P 500 counterparts slipped by 10 percent during the same period. The survey found the sector’s growth is being driven by consumers and businesses that are reluctant to spend cash upfront to own services and products.”