Subscription Services Weather COVID-19 Storm: Study

Southampton, England - July 31, 2017: Using a television remote control with dedicated Netflix button, TV in the background.
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New data suggests subscription companies are managing to weather the coronavirus storm, with video services continuing to be the main winner.

Data from software company Zuora for the month of April shows 47 per cent of companies have not seen a significant impact to subscriber acquisition rates, while one in five companies enjoyed an acceleration in subscription growth.

Over the top (OTT) video streaming continues to be the biggest beneficiary of the new market conditions, posting a 6.6X growth figure as of April 30 compared with the previous 12-month baseline.

Digital news and media subscriptions grew 2.4X and e-learning subscriptions increased 1.9X.

“These numbers show that our first report wasn’t just an aberration. Yes, some of the growth rates are very gradually trending back towards normal levels, but on the whole subscription companies are weathering this economic storm exceptionally well,” said Zuora’s vice president and general manager of APAC Iman Ghodosi.

While certain sectors have enjoyed success during this time, others continue to struggle.

Some 17 per cent of companies saw declining growth in April, while 15 per cent of companies had subscriber churn outpace acquisition rates.

“Streaming services are obviously doing well because people are watching Netflix or Stan when they might otherwise have been at the footy or the gym. But there are many subscription companies who haven’t been inherently advantaged by the big economic changes brought about by the virus,” said Ghodosi.

“These companies are still coping well, and in some cases excelling because they have levers they can pull to change what they offer to customers whose circumstances might have changed dramatically. And in many cases, these are levers not available – or at least not as easy to access – to traditional product companies.”

The data also shows how different companies have responded to the crisis in order to suit changing consumer demands.

This includes paused billing, delayed payment requirements and changed prices.

 

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