Digital Trend Alert

 

Online Subscription Servies

Online Subscription Services: the new winning business model

Carol Ingley, President, Media Mogul Enterprises

Week of September 7 through Week of October 5, 2020

Digital Trends: online subscription services, online video subscription services, online gaming subscription services, online music subscription services, social media, ecommerce, Netflix, Hulu, Amazon Prime Video, Disney +, Apple TV +, Quibi, Walmart +

 

     In the News. There’s been a  lot in the news lately about new online subscription services. Think Disney +, Apple TV +, Quibi, and Walmart +, to give a few examples. Most of these examples are online video streaming services, but Walmart + is an ecommerce service that provides unlimited free delivery on more than 160,000 items. 

     What they all have in common is there’s plenty of excitement and opportunities surrounding them. But there’s more to the excitement than meets the eye. Here are four trend statements that explain what’s likely to happen.

     Trend #1: It’s All About the Categories. To really understand what all the buzz is about, it is important to understand the different categories of online subscription services. The focus here is on seven broad categories: Video (TV and Movies), Video (User Created), Gaming, Music Video, Music, Social Media and Ecommerce.

Tr

     Traditional players in online subscription services in Video (TV and Movies) have been Netflix, Hulu and Amazon Prime Video, but that is changing fast. Key players in Video (User Created) include YouTube. Online gaming subscriptions vary according to the device used. For PCs, here are a few of the services: Microsoft Game Pass for PC, Humble Choice and EA Origin Access. Examples of Music Video and Music online subscription services include Spotify, SiriusXM Internet Radio, Amazon Music Unlimited, YouTube Music, and Apple Music. While Social Media is generally free, it is included here because companies like TikTok (Video – User Created) fall into several categories. And while the TikTok business model is currently free, tiers and different services are evolvinig (such as the recently announced TikTok for businesses) in a similar way that YouTube has developed tiers and different services that do require a subscription. Ecommerce subscription services include Amazon Prime and Walmart +.   

Categories in Online Subscription Services

     With that background regarding categories in online subscription services, here’s where some of the excitement lies.

     Trend #2: Meshing of Technology and Content Creates a Hungry Beast. As of April 2020, Netflix has 183 million subscribers worldwide, with more than 60 million in the U.S. It is a phenomenal accomplishment but it couldn’t have done it without meshing state-of-the-art technology with superior content. The infrastructure that is required for Netflix to deliver video globally is mind-boggling in its complexity. This complexity, until recently, posed a barrier to entry and kept potential competitors on the sidelines.

Trend 2

     This mesh of technology and content is the new winning business model.

     But there’s a consequence to this massive investment to get content out to subscribers. As more and more companies in online subscription services invest in state-of-the-art technology, growth becomes imperative. No company wants its pipes to be empty and idle.

     That’s where the seven categories of online subscription services come in. These seven categories can be mixed and matched.

     Trend #3: Mixing and Matching will Happen. What’s showing up in the marketplace are online streaming services that can be mixed and matched. Netflix’s focus right now is on streaming video (TV shows and movies). Spotify is a digital music, podcast and video streaming service. That’s its focus - music.

Trend 3

     These two companies, and any company that offers an online subscription service, can add additional services.

     It’s really about mixing and matching from a smorgasbord of choices. This is why Walmart has teamed with Microsoft for the purchase of TikTok’s  U.S. operations. Add ecommerce to TikTok’s current model of music and dance videos and who knows  what magic that might bring, done in the right way.

     Trend #4: Every Online Subscription Service is Up for Grabs. All of these online services want to survive and thrive. But eventually, a cluttered marketplace will evolve. Companies will want to expand and they will begin to look at the opportunities in the market.

Trend 4

     Down the Line. For now, there are many new online subscription services rolling out. Down the line, the companies that figure out the right consolidation formula for growth in this way will be the winners.

      

 

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