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Trends shaking the subscription universe

As we move towards business end of the year, let’s take a quick look at the trends that are impacting the subscription world. What do developments in education-technology (edutech) mean for quality education across the country? How is the media and publishing industry coming to terms with new realities of digitization and fake news? What does the future hold for the burgeoning OTT platform?

We view all this with the chastening lens of what it ultimately means for the customer: will she or won’t she bite the subscription apple.            

Trends in Education

According to Kaizen report,the Indian education sector is witnessing four mega trends: 1) Individualisation 2) Massication 3) Collaboration and 4) Convergence. These, in combination, will mitigate the developmental challenges like quality, access, and relevance in education.”

The race is therefore on to create digital platforms for individualised learning. Downloadable apps are within the reach of everyone across the country. Content being a crucial differentiator, is impelling creative and technical teams to collaborate and come up with attention grabbing gamified stories. As a consequence, we are witnessing convergence of a whole gamut of products and services weaving together an enterprising educational ecology.

The Indian online education market is on a growth spree and is estimated to reach the figure of $2 billion by the year 2021. This growth will be spurred by a massive rise in paid users subscribing to online education platforms.

Trends in Media & Publishing

Across the world, newspaper and magazine publishers are striving to adapt to challenges and opportunities presented by digital disruption and economic shifts. But this is not affecting the mature and emerging economies alike. Consumers in mature economies like North America and Western Europe are turning away from print so the industry is losing volumes. At the same time, newspapers continue to grow in popularity among the aspirational classes in parts of Asia Pacific and Latin America.

As demand for news grows in emerging markets, global newspaper circulation is likely to increase overall while the share of advertising revenues decline.  And it’s increasingly clear that publishers are going to need multiple revenue streams to survive, since digital advertising alone will not be enough to sustain them. Prompting traditional news companies to move into areas like video, events and paid-for products. Newspapers globally are looking to create expanded capabilities and revenue growth around areas like mobile, advertising technology, video, digital audio/podcasts and data analytics/data mining.

Trends in OTT

According to OTT TV and Video Databook study global OTT revenues grew by $17 billion reaching $68 billion in 2018. This was up from $51 billion in 2017, and almost double the $38 billion of revenues recorded in 2016. Among the three primary monetization models of AVOD (You Tube), SVOD (Netflix, Amazon Prime) and TVOD (iTunes), SVOD is by far the leading revenue source garnering upwards of 53% of share of the overall revenue in 2018 at $36 billion, up $11 billion from2017.

Nevertheless, there are indications of OTT platform players experimenting with hybrid content monetization models to maximize revenue from consumers willing to pay. Though You Tube started on AVOD platform, it is now allowing access to premium content by providing TVOD services. Spotify is similarly offering the ‘freemium’ services to its over 170 million monthly users.

There is also a growing trend of OTT driven original content generation. Not surprisingly the FAANGS collective (Facebook, Apple, Amazon, Netflix and Google) increased their content budget spend by over 40% with Netflix alone likely to spend $15 billion in 2019.

Another increasing trend is of content fragmentation. With growing popularity there is a scramble among new OTT entrants like Apple, Warner Media, and Disney to shore up exclusive content.  Netflix had to pay WarnerMedia, the content owners of American sitcom series ‘Friends’, $80 million just to run the show for another year. WarnerMedia is likely to host this popular sitcom on its own streaming platform scheduled to launch in 2020.

OTT content is now being viewed on the mobile phone more than on any other device. Netflix data shows that 20% of their viewing occurs on smartphones with at least 50% of their customers logging in from mobile devices at least once a month. Furthermore, 30% of the initial Netflix sign-ups occur on mobile devices.

Future belongs to those who keep their focus on the paying subscriber

In all these likely scenarios it is the subscribers who will be calling the shots. In all industry verticals new entrants will begin to experiment with this business model. Data theft and privacy concerns may lead to stringent regulatory regime prompting greater investment in fail proof data management systems.  While subscriptions business is based on promises being fulfilled, a not so great user experience will lead to churn causing cashflow bottlenecks. As everyone acknowledges it’s difficult and expensive to acquire a new subscriber than retain existing one.

In a constantly evolving subscription business world, you got to run just to stay put. What makes business sense to a company must also meet buyers’ expectations. So, everything boils down to how the customer experiences the product or service, how the pain points in the process are eradicated, how relationships are built with innovative offerings and rewards.

In final analysis, it should appear as if the entire subscription universe is conspiring to make every experience a happy one… all the time.

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