The Time Is Right for Publishers to Leap into the Subscriber Economy
This insight is the first in a series of articles outlining the background and imperative for publishers to embrace the continued growth in the subscription economy. In this series we will identify how different types of publishers are addressing digital transformation and preparing for the shift to subscriber-centric business models.
The Subscriber Economy
Every way you look at it, online subscription driven media businesses are booming. Netflix, Amazon Prime and Spotify recently reported subscriber volumes of 118MM, 100MM, and 71MM, respectively, with 2017 annual growth rates ranging from +25% to +48%.1 Netflix, Amazon Prime, and Apple Music have reached subscriber penetration levels that approach those of pay TV.2 Interestingly the growth is not concentrated in one vertical or industry. We find significant subscriber growth across a range of sectors including video, music, consumer goods, media and gaming, among others. Consumer behavior is shifting from one-off purchases of products and services to building long-term relationships with trusted brands. Media companies have a sizeable opportunity to capitalize on these market trends.
The Appeal of a Subscriber-Centric Business Model:
What makes a subscriber-centric business model attractive to so many different types of companies? The major characteristic is the predictable and recurring revenue stream, which enables subscription-centric businesses to invest in both new customer acquisition and product development to grow their subscriber bases even more.
1. Mary Meeker Internet Trends, May 2018.
2. FTI Consulting Hot Topics in Media & Entertainment, January 2018.
Senior Managing Director