Subscription Economy News – Week of 12/17/18

Every week, we bring you the top stories and analyses from the global Subscription Economy.

Tech CEOs: This Year’s Favorite Books
Excerpts from an article by Tom Taulli in Forbes
What are CEOs reading now? Here’s a look:

Leading at the Speed of Growth: Journey from Entrepreneur to CEO
Tien Tzuo, CEO and co-founder of Zuora: I hesitate to give away a great secret, but “Leading at the Speed of Growth,” by Katherine Catlin and Jana Matthews, is absolutely mandatory for anyone involved in a high-growth organization. Your job changes dramatically as your company expands, and this book does a great job of identifying all the relevant priorities, skill sets and red flags by growth stage. Plus, all the personal stories from entrepreneurs in the trenches are really great. Even though it’s almost twenty years old, it’s still incredibly relevant in light of all the IPO and M&A activity we’ve been seeing lately. When you’re running a subscription-based business model, you find yourself dealing with a lot of growth-based “nice problem to have,” and this book helps answer those problems.

The SPEED of TRUST: The One Thing That Changes Everything
Eric S. Yuan, Founder & CEO, Zoom Video Communications: One of the best books I read this year is ‘The Speed of Trust: The One Thing That Changes Everything’ by Stephen M.R. Covey. It drives home the fact that trust is not “a nice to have,” that in fact, it’s integral to the speed and success of your business. You need to have a strong team in place who can trust each other in their respective roles and responsibilities. If you have that, you can work faster to get things going and know everyone is focused on the same end goal. Trust is the cornerstone of everything we do at Zoom, and since we know that video increases trust, we believe everyone should be doing business on video.

Read the full list here

Subscription OTT Revenue to Surpass Cinema in 2019
Excerpts from an article by Kristin Brzoznowski in World Screen
According to Ampere Analysis, global subscription OTT revenues are set to reach $46 billion next year, overtaking box-office revenues, which are forecast at $40 billion.

The slowdown in theatrical in North America and Western Europe is the primary driver of this trend, as SVOD continues to grow in all regions. In the U.S., subscription OTT revenues overtook theatrical revenues in 2017. The U.K. is expected to follow suit by the end of 2018. In China, it will happen in 2019.

Read the full article here

The Netflix of Farming? Industrial Firms Want in on the Subscriptions Bonanza
Excerpts from an article by Al Root in Barron’s
The market loves recurring revenues. Barron’s pointed that out in last week’s cover story, which highlighted the example of Adobe (ADBE). The software maker jumped into subscriptions seven years ago. Its success has helped convince investors about the benefits of software as a service (SaaS), even for an old-school tech company.

Now industrial companies are another batch of old businesses that are trying to get in on the subscription bonanza.

Traditionally, whether it’s an aircraft engine or an escalator, recurring revenue within the industrial industry means parts and service. Businesses like Rolls-Royce’s aircraft engines or United Technologies’ Otis division proudly boast that up to 50% of revenues come from servicing an installed base of machines.

Parts and services are a big deal for industrial firms not only because they recur, but also because it’s usually higher margin business. Consulting firm McKinsey estimates that industrial margins on aftermarket services are 25% compared with 10% for original equipment.

But industrial firms are attempting to go beyond parts and service, with something more akin to a subscription model. The goal is to monetize all of the data coming from machines and from factory floors.

Read the full article here

What does membership mean for BuzzFeed News — at a company that’s already raised nearly $500 million in venture capital?
By Christine Schmidt in NiemanLab
BuzzFeed, Vox Media, Vice, and even Mic — R.I.P. — are part of the club of publishers born of the digital age, Miracle-Gro’n with VC money, constricted by the standard industry pressures, and now evaluating next moves. But BuzzFeed is, so far, the only one of them that has turned to a more granular, reader-revenue approach.

BuzzFeed is expected to hit $300 million in revenues this year, after missing its $350 million target last year by about $90 million. Membership, which just kicked off last month after an open appeal to followers earlier this year, is one of the threads BuzzFeed is trying to weave together, with a Netflix series following their reporting process, a weekday Twitter live show, and a Facebook Watch interview series; affiliate links in a Wirecutter-like setup (something The New York Times has also relied on in its own diversification strategy); and running traditional banner ads, among others.

Read the full article here

For more Subscription Economy resources and events, head to Subscribed.

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