Subscription Economy News – Week of 3/4/19

By Stephanie Li March 6, 2019

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

How subscription is replacing ownership 
Excerpts from an article by Mark Savage in BBC News.
More money was spent on subscription services like Spotify and Netflix last year than on physical DVDs and CDs, according to new figures from the Entertainment Retailers Association. In music, subscription now accounts for 62% of total revenues; while video on demand has a 55% market share. Video games show a similar trend, with online subscriptions generating more than downloads and disc sales. “New digital services have created a ‘Generation Rent’ for whom access models seem natural,” said ERA CEO Kim Bayley.

“It is nothing less than a revolution in the entertainment business.” Many people just don’t have the room for piles of DVDs and CDS – the decline in ownership of such items comes at the same time as house sizes are shrinking across the UK. Living rooms in newly built homes are nearly a third smaller than equivalents from the 1970s, researchers found last year. Younger generations are also less concerned about owning music and films, preferring instead to curate their collections online.

Read the full article on BBC News. 

With Big Stars and Paid Subscriptions, Luminary Aims to Be the Netflix of Podcasts 
Excerpts from an article by Brooks Barnes in The New York Times.
“We want to become synonymous with podcasting in the same way Netflix has become synonymous with streaming,” Matt Sacks, Luminary’s co-founder and chief executive, said in an interview. “I know how ambitious that sounds. We think it can be done, and some of the top creators in the space agree.”

Mr. Sacks, 28, was referring to Guy Raz, known for “How I Built This” and other hit podcasts; Leon Neyfakh, the “Slow Burn” creator and host; and Adam Davidson, a force behind “Planet Money,” the award-winning NPR podcast. All three men have signed on with Luminary for their next shows, which will roll out exclusively on the company’s app in the coming months.

Most podcasts are free, but the Luminary app — set to arrive by June — will focus on subscriptions. For $8 a month, subscribers will gain access to Luminary’s ad-free lineup. For creators, Luminary is offering large upfront payment guarantees in exchange for exclusive rights to distribute their work, reducing the risk of a concept and, hopefully, encouraging greater creativity and higher production values. Luminary will also pay creators bonuses if their shows reach certain listening thresholds.

Read the full article on The New York Times. 

Retailers Banking on Recurring Revenue Streams
Excerpts from an article by Alan Wolf in Twice. 

To help buttress their finances and create a steady, dependable cash stream, retailers are taking a renewed interest in service subscriptions and other recurring revenue models. The concept isn’t new: Dealers have long received a piece of the action from sales of third-party service plans, satellite and cable packages, and mobile phone contracts. Indeed, the Nationwide Marketing Group last month announced a new partnership with AT&T that will allow its members to sell a full basket of offerings from the telecom giant, including Internet, wireless and DirecTV subscriptions.

The imperative has certainly not been lost on Best Buy, which is taking a two-fold approach to its recurring revenue model.Looking outward from within, the retailer is repurposing its Geek Squad tech support operation from a one-shot repair service into an annualized membership program called Total Tech Support. For $200 a year, customers receive a host of included online and in-store services, including PC assistance and car radio installs, while in-home services like TV mounting, furniture assembly, and Wi-Fi setup and troubleshooting are provided at the discounted rate of $50 per visit. Best Buy started out with a 10-city, 200-store pilot program in 2017, and by last spring had taken it nationwide. At year’s end Total Tech Support had amassed more than 1 million subscribers, and helped give comp sales from services a 13.7 percent boost in the fourth quarter ended Feb. 2, 2019, up from 8.5 percent the prior year.
Read the full article on Twice. 

The video game subscription wars are on
Excerpts from an article by Sarah Fischer in AXIOS.
Google, Microsoft, Apple and Amazon are each reportedly working on their own versions of a “Netflix for games,” as the tech giants enter a heated battle to own the subscription business for video games.

Yes, but it’s easier said than done. Netflix rose to the top in part because it was able to exploit a gap in the market years ago around content licensing. An exact parallel to that doesn’t exist in the gaming industry.

Driving the news:

  • Google is planning to unveil its videogame service at the Game Developer’s Conference next month in San Francisco, Fortune reports. The search giant is reportedly spending heavily to get game publishers to license their content.
  • Apple is looking to build a service that allows users who pay a subscription fee to access a bundled list of titles, Cheddar reported in January. Apple could choose to use a March 25 event, where it is expected to introduce news and video subscriptions, to also debut a game subscription offering.
  • Microsoft’s service could let users play high-end video games anytime on any device, not just Microsoft’s own Xbox console, Business Insider reported in January.
  • Amazon is building a subscription streaming service for games, The Information reports. Like Google, it’s also reportedly in talks with game publishers.

The big picture: Subscription bundles for games have been around for a long time, but some of the new streaming services will aim to move not only the software but the processing for the game into the cloud.

Read the full article on AXIOS. 

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