This Week’s Subscription Economy News: EA, SoundCloud, Lynda.Com, RTL Nederland, Skully

By Aarthi Rayapura August 25, 2014

 

 

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High-speed Internet subscription have out-paced TV subscriptions for the first time, according to data gathered by Leichtman Research Group. The gap is small — there were 49,915,000 broadband subscribers at the end of the second quarter in 2014 versus around 49,910,000 cable TV customers — but it represents an important tipping point. The cable companies aren’t hurting for profits, but cord-cutting (as opposed to paying for 500 unwatched channels) is becoming increasingly the norm, and televised content is moving  to V.O.D. over broadband.

 

 

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Subscription gaming plans are moving from MMOs like “World of Warcraft” to consoles.  After launching a beta in July, Electronic Arts’ new “EA Access” subscription service is now available to everyone who owns Microsoft’s new Xbox One console. The service features unlimited access to select EA games (Battlefield 4, Peggle 2, FIFA 14, Madden NFL 25) for $4.99 a month or $29.99 per year.  EA says the selection of titles “will evolve, with games joining the collection over time.” A new top-tier game costs $60, so it’s certainly affordable, but EA seems to be launching with relatively limited content options to gauge baseline user interest.

 

 

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Right now the big revenue opportunity in online education is in professional training. The professional tutorial resource Lynda.Com is on a tear. It’s on track to top $200 million in revenue this year, and an IPO is rumored to be in the works. Lynda.Com  emphasizes actionable skills with hundreds of courses and video tutorials ranging from AutoCad to Excel. Subscribers pay $25 per month for unlimited access, with enterprise pricing available to larger buyers like Disney and Apple.

 

 

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HBO could get $600 million per year in free money if it decided to offer an online subscription plan, according to a  new report from Barclay’s. The report lays out two primary options: sell subscriptions to “windowed” content that would be available six months to a year after it first aired, but at $11 per month versus the $15 cable price. The other option would be to sell digital subscriptions that give immediate access to its shows, but charge a higher price—about $18. “HBO is possibly the only thing people on the Internet are regularly whining about not being able to afford even through they want to subscribe,” says Ars Technica.

 

 

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Only about one-third of the world’s population has ever been on the Internet. For the next two-thirds, their first web experience will probably be on a smartphone. By the end of 2018, there will be an estimated 8.2 billion wireless subscribers in the world, which are expected to generate an estimated $1.2 trillion in total mobile service revenue.  And actually talking to people is becoming less of an imperative. Voice revenue is expected to fall from 63 percent of revenue in 2012 to 40 percent in 2018. Phones are enabling services as much as they are communication.

 

 

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What does it say about the quality of advertising when content providers are primarily using it as a way to incentivize subscriptions?  SoundCloud says it now reaches over 350 million people every month, and has more than 175 million unique listeners.  Last week the company launched a new advertising platform, which it says will run for several months before the introduction of an ad-free subscription platform. According to public filings in Britain, where SoundCloud has an office, it had about $13 million in revenue and $20 million in net losses in 2012, the most recent year for which its accounts are available.

 

 

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Why don’t creative software developers spend more time fixing bugs and less time adding new features? They can’t afford it, says training media professional Larry Jordan in this sharp blog post. Traditional sales models tie dev teams to feast-then-famine revenue cycles that over-emphasize new product features at the cost of actually making things work better. The emphasis is always on “what are we doing next?” Development funded by subscription services like Adobe’s Creative Cloud allows a deeper emphasis on fixing bugs (traditionally a non-revenue generating endeavor!) and improving actual performance.

 

 

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The giant international VOD race continues in countries where Netflix is just one of many regional competitors. Savvy media companies like RTL Nederland have been acquiring a range of content and delivery platforms. “RTL had anticipated the launch of Netflix,” says RTL Nederland CEO Bert Habets. In August, RTL Nederland acquired a 65% stake in the Entertainment Group, which owns Videoland, the biggest local VOD platform. “The VOD market is only just starting to develop, and we will see a quick increase of suppliers in the coming years.”

 

 

 

 

 

The Skully AR-1 Motorycle Smart Helmet looks like something out of Iron Man: heads-up display, GPS navigation, and a rearview camera. But what do these new capabilities mean for motorcycle manufacturers? BMW, for example, currently has a lock on enduro and touring bikes with its GS series. What would a BMW motorcycle subscription experience look like? Maybe talking through a fix with a mechanic (who can see your bike!) somewhere along the Pan-American Highway.

 

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