Another week, another smorgasbord of subscription stories for you. In the newsletter this week we take a look at:
📺 the total TV usage in the US focusing on streaming services
🗞️ the digital news report - why do Scandinavians love digital news?
🔬 why necessity often drives invention (struggling with the emoji here)
and of course a lot more, including Instagram’s subscription product and The Information’s tactics to win me back.
Nielsen have recently introduced a new measurement of streaming services and this presentation at Cannes Lions 2021 highlights the insights they can deliver.
If you have time it’s worth watching the video of the presentation, here are some key insights:
Three categories of streaming services are used:
- SVOD where a user pays a subscription commands 52% of usage
- AVOD where usage is ad supported, this includes YouTube and makes up 27% of usage
MVPD linear TV content accessed via an app. Nielsen believes this segment is growing as user behaviour is changed by the use of other streaming services
A key to future growth of any streaming service may be the ability to gain traction within specific niches. The data shows Disney with a very young audience. YouTube with the most diverse audience - maybe a reflection of their diverse range of content? Amazon is interesting in just how old the audience is - a reflection of the affordability of Prime?
Are there opportunities to gain share by targeting a niche? Is streaming going to get more fragmented in the short term?
From the chart above you can see the level of duplication across services. YouTube is perhaps least surprising as for most it will be free to access. Netflix is clearly the primary channel - for now.
Nielsen talk about the measures of success being - how many people are viewing? How often do they view? and for how long do they view? YouTube leads the way in days accessed per week and on minutes viewed - but is this a fair comparison as the content is so different. I now watch a lot of YouTube but that’s mostly for finding out how to do some form of DIY. Netflix days per week used at 2.5 seems low - would be interesting to see how this varies by age demographic.
The presentation also noted other factors contributing to success (without any measures) as:
- interface or user experience
- distribution eg getting the app on Roku or the latest Samsung TV
- value eg price, ads, content - Nielsen see this as the next battleground
There was an intriguing slide about weekly episodic content consumption versus a series being available all at once. Nielsen compared the Mandalorian with Cobra Kai with the former coming out on top, despite its restricted release. Again I'm not sure this is comparing apples with apples.
To round off the presentation Nielsen highlighted their new monthly measure “The Gauge” a snapshot of total TV usage in the US. Interesting that “other streaming” forms the highest percentage of streaming - pointing to a fragmented market? Also these measures paint only part of the picture. Streaming services are being consumed on multiple devices, not just the TV, so to some extent “The Gauge” is misleading.
Reuters Institute Digital News Report
The Reuters Institute has been producing a report on the state of digital news for the last 10 years. There is a lot about misinformation and trust in news outlets but also strong insights on paid access to news. A few points that stood out for me:
The Nordic countries are leading the way in getting people to pay with 45% paying for news in Norway and 30% in Sweden.
By contrast 21% of respondents said they paid for news in the US.
The rest of the world lags way behind - France and Germany are both poor. But worse still is the UK, only 8% of Brits have paid for news - maybe this is the BBC effect?
The report suggests that in most countries there is a “winner takes most” situation where one outlet will dominate paid subscriptions. Looking at the data I’m not sure it’s that clear cut and I also wonder whether it’s just too early to say. In the UK it’s worth considering how well the Guardian compares with a very different approach to generating paying users.
There is an interesting slide on how users access news. With a suggestion that most users are coming via a “side door” - social or search rather than direct. The “side door” also includes email and alerts which seem substantially different to me, as they are clearly publisher controlled channels.
Twitter stands out as an acquisition channel as users expect to find the latest news there. On the other social channels the news is something that users come across while they were there for other reasons.
You can find a comprehensive presentation on the data in the report here.
Necessity is the mother of invention
In 2019 a group of journalists left G/O Media owned Deadspin in a dispute over an editorial edict. A few months later they set up Defector Media. Today they’ve built a media business with 39,000 subscribers and growing. You can listen to their story on the Media Voices podcast. Key points:
The new media venture went with a subscription model from the start for the simple reason they had to generate cash flow. Within 24 hours they had 10,000 subscribers from the Deadspin audience. Nine months on that has grown to 39,000.
The team’s understanding of their audience or fans led them to introduce subscription tiers to reflect the level of engagement. The “Pal” tier includes the ability to comment, commenting was strong on Deadspin and the team believed they could charge extra for access to do this. You can see the tiers and what they include below.
In terms of price their initial thought was to charge $5 a month they but quickly realised this simply wouldn’t generate enough revenue so moved it up to $8 a month. They also added a premium tier named Accomplice for super fans (see below) at $1000 a year - so far they have more than 100 people signed up.
95% of Defector revenue comes from subs, they intend to expand into live events and podcasts to diversify revenue and get more people into the funnel.
Where some legacy media companies almost seem apologetic in the marketing of their subscription products, Defector is straight to the point. They also clearly realise that email is likely to be the primary channel for converting readers to subscribers - I was asked for my email address on the first article I tried to read.
The Information’s use of free
Just over three years ago I cancelled my subscription to The Information - I loved the content, but didn’t need it in my new role. At the time there was some win-back activity but nothing significant. Just over a week ago and out of the blue I was sent their “Creator Economy” email, normally only available to subscribers. Not sure why I received this particular email. But the content was strong and each of the five subsequent newsletters I was sent had a half price subscription offer (see below).
It’s been reported that The Information is on a subscriptions drive. Retargeting users who have previously found value in the product would be a quick win. Using the exclusive newsletter content is a smart channel - it’s simple and doesn't mean they have to offer any free access on the website. I thought the email sequence had stopped - but it’s just been interrupted by July 4 holiday - it will be interesting to see how long this continues and whether they recognise my engagement with the content.
Instagram is currently testing a new feature which enable the creation of exclusive Stories that can only be accessed by members. As Facebook looks for ways to attract and retain creators, enabling them to offer a subscription service on Instagram is a clear opportunity. How a subscription would work, given the ephemeral nature of Stories remains to be seen.
Cameo which offers personalised videos featuring stars from tv, music and sports grew sales to $100 million last year - at least in part fuelled by the pandemic. Cameo look to be moving beyond one-off messages to a monthly subscription product called “Fan Clubs”. This is yet another business fighting to acquire and retain creators.
Apple have bought a button on the latest Roku remote. As noted in the Nielsen piece above - distribution is vital. This is an unusual move for Apple - does it signal a failure or the start of a massive investment in Apple TV+?
For many users their free trial of Apple TV+ ends this week iMore conducted a poll on likelihood to continue to subscribe. Over 1500 respondents, when I looked, so a reasonable sample size. Close to 41% were either going to or likely to cancel, which is surprising given the very low monthly price of $4.99, but maybe a reflection of the lack of original content?
We’ve previously covered Outside, an outdoor / healthy pursuits lifestyle legacy publisher who created a membership product called Outside+. According to Digiday 40% of new users are choosing the membership bundle over an individual subscription. An individual print and digital subscription costs $49 compared to Outside+ at $99 so that’s a significant uplift on 40% of the transactions. We’ll continue to watch to see how much the shift from subscription to membership makes.
Advertising spend has shifted to target users of Android devices after Apple tightened its tracking rules. Android ad prices have jumped after less than 33% of iOS users opted to be tracked. The change has been slow to come through since it was implemented in April, as users upgraded to the latest version of iOS.