Subscription Saturation: Time for a new tool to monetize content

The Covid-19 pandemic has revealed key trends and lessons for the online media and entertainment industry, and with it new opportunities for innovation and adaptation.

Deloitte recently released the 14th edition of their highly regarded Digital Media Trends Survey, and in the wake of Covid-19 the takeaways are key lessons for anyone in the online media industry. We break down for you all the things you need to know.

1) Deloitte originally conducted their survey in late 2019, but as the Covid-19 crisis unfolded they issued a second survey, providing them with unique insight into how the pandemic has changed consumption behaviours.

2) There is a clear counter-balancing trend emerging: on the one hand, customer acquisition increased, especially among video, music, and gaming services as people had more time on their hands as they stayed home. Yet, churn also accelerated as people reached the end of introductory offers or felt the financial pinch of the pandemic (39% reported lower incomes), and so cancelled their subscriptions.

3) US households have on average 7 digital screen devices — smartphones, tablets, smart TVs, and laptops — and the average US consumer has 12 media and entertainment subscriptions across TV, video, music, news, podcasts, audio books, gaming.

4) Yet even while some intend to sign up to more services, there is a simultaneously an onset of subscription fatigue. For Millennials, the fatigue is highest, with 40% feeling “overwhelmed” by their subscriptions, and 43% intending to cut back. For Gen Z and Gen X these numbers are also high, at around 30%. The data suggests that churn will continue to be a growing issue for content providers in the near future.

5) The publishing industry saw consumers make the most cancellations and fewest new sign ups. For digital magazines 6% of consumers cancelled a digital magazine subscription, while just 7% added one. For online newspapers it was 5% of consumers cancelling and 8% signing up. Compare that to video which saw equal numbers in cancellations, with 5% of US consumers dropping a video service, but a huge 23% of them signing up for new video streaming subscriptions.

6) Video streaming services are not immune, however. Even as subscription rates reach record levels — 80% of US consumers now have at least 1 video streaming service — competition is increasing with new players entering (think Apple TV+, Disney+, HBO Max) that will put pressure on pricing. Also, if and when there is a return to more normal times in a post-Covid era, churn is likely to increase as US consumers confess that they signed up because they had more time at home to watch.

7) Video gaming has also seen a surge. About 7% of US consumers subscribed to a video gaming service for the first time ever during the pandemic, with half of all respondents saying they have participated at least once in video gaming since the start of Covid-19. This of course skews heavy to younger demographics, with 52% of Gen Z saying they play for at least an hour once a week, compared to 46% for Millennials, 30% for Gen X, and 12% for Boomers.

8) The pandemic has prompted many people to try new things, with 38% of those surveyed saying they had tried a new digital activity or subscription for the first time since the outbreak, with over 66% saying they would probably stick with it even after its over.

9) The pandemic prompts some key questions for the media industry to consider, but the main one is this: how can companies grow their user base and increase retention rates when consumers face both a growing array of choice and a less secure or diminishing income?

Our hypothesis

The pandemic has thrown into stark relief 4 key lessons for the online media industry, and for online content creators in general:

1) There are only so many subscriptions people are willing to have, and the pandemic marks the beginnings of ‘subscription saturation’ in the economy.

2) If people are limited to just a few subscriptions — just 1 or 2 for news subscriptions according to a 2019 Reuters Institute report — audiences are forced to make a choice they don’t want and constrain their sources of news and entertainment.

3) For the subscriptions they do have, users are required to pay upfront and then claw back the value. With a backdrop of economic instability and falling incomes, this makes every subscription a burden as consumers struggle to maximize value for money, and is a core driver for growing churn in the industry.

4) The above problems are rooted in an over reliance on outdated methods of monetization that no longer match the the needs of the majority of their audiences. As ad revenues decline, many outlets are putting up paywalls. But paywalls are blunt instruments, great at capturing core users, but terrible for everyone else — the massive ‘missing middle’ — who prefer and need something more flexible and fair.

Our solution

When paywalls are used to capture new audiences the result is unsustainable for revenue: higher spend on marketing to reach them, lower prices and discounts to persuade them, declining conversion rates to capture them, and lower lifetime value from each of them as they churn early.

What is needed is a more dynamic payments infrastructure to give publishers and content creators the ability to charge their audiences only for what they consume. We don’t mean micropayments, which rarely work because the burden of making lots of minor financial decisions on every piece of content accumulates quickly for users.

We’re talking about streaming payments on a ‘pay as you scroll’ basis. Your audiences can click on content and only pay as they start to consume it, i.e. scrolling or playing the video. If they only scroll half way, then they only pay for what they have seen.

For you, the publisher, this solution opens up your product to all the people around the world who enjoy your content, and are willing to pay for your content, but just not through a monthly subscription.

StreemPay is a new tool for you to monetize a new audience. Compatible with your existing paywall, it can sit along side your current business model and tap into a longtail of users that don’t traditionally convert on your site.

And for your audiences? They get a seamless browsing experience, with no login or registration and no need to get out a credit card, just the opportunity to enjoy a rich and varied source of news and entertainment — just how the Internet ought to be.

If you’re interested in supporting our mission to open up more great content to more people, then join our waitlist here and get $20 in credit when we launch.