Zuora’s CEO and Founder Tien Tzuo was interviewed on Fox Business News, by Liz Claman, host of “Countdown to the Closing Bell” about the recent video streaming wars happening in the Subscription Economy. Watch the clip here.
The signs are everywhere — we’re witnessing the end of ownership. In industry after industry, unit sales are down, but digital services are up. Fewer cars are being bought, but miles driven are rising. Fewer individual songs and movies are being purchased, but streaming content is up. We’re all buying fewer newspapers, but news consumption is up.
Consumers would rather Subscribe than Own and companies like Apple, Disney, Microsoft, are profiting. In fact, our data shows that over the last 7 years, subscription revenues have grown 300%.
So when a century’s old company like Disney joins the Subscription Economy, you know they see it as a long-term growth opportunity. Like Netflix, who invested $12 billion in content just last year, Disney has the recipe for subscription success: original content, a fan base to grow into loyal subscribers, ability to test out pricing.
Any company in any industry can follow the same model for long term, reliable recurring revenue. Wall Street loves the subscription model.
The framing of “Disney versus Netflix” and “can Disney take down Netflix” is wrong. Disney is going to do fine, and Netflix will do fine, and HBO will do fine. The big picture here is it’s so easy for companies today, with digital tech, to build direct relationships with their customers. They’re doing that by launching original content through a standalone subscription service.
Tien Tzuo thinks this is the early days of OTT. He said:
It seems too easy as an end user. You just pick up your phone, fire up your browser, and you start using these (subscription) services. A lot of things have to happen behind the scenes. You have to check your credit card, remember to send out the monthly bill, figure out how much revenue you should recognize, or allow your customers to upgrade to a family plan or a better bundle. We take on all that so that companies can focus on what they do best which is providing a great service and a great experience for their customers.
I think people are missing the big picture which is that OTT today really only represents 5% of the $500 billion spent on TV. This is really the very early days and there is probably room for many vendors to thrive. If you think about the cell phone market there’s AT&T, Verizon, T-Mobile, and Sprint. It’s true that they use pricing and packaging to compete with each other, but they also have differentiated products in the marketplace.
Learn more about how to launch a successful business model for streaming content by downloading our Blueprint for a Subscriber-Centric OTT Video Business.