Spoiler Alert: The Real Battle on Television Is For Long-Term Subscribers

By Amy Konary, Chair of the Subscribed Institute at Zuora

“Successful subscription companies focus on stickiness, not ratings.”

When the third season of The Handmaid’s Tale, Hulu’s biggest ever hit kicks off this summer, one thing is for certain—millions of fans around the world will tune in to catch their favorite show.

What is unclear is whether these fans will continue to subscribe after this season ends.

Now, don’t get me wrong. The new season will most likely be as amazing as the previous two and probably garner Hulu more critical acclaim (eight Primetime Emmy Awards from 13 nominations, two Golden Globe Awards, and counting!). More people watched the series premiere than any other on the streaming service and the show has no doubt helped propel Hulu’s subscriber base to over 20M.

So, shouldn’t hit content guarantee subscription success?

Not quite. While success in the traditional entertainment business relies on selling
a mega hit to many different customers, a successful Direct-to-Consumer (D2C) subscription play relies on offering ongoing value to individuals and creating frictionless opportunities for them to find and consume different types of content. Hits might entice subscribers to sign up, but once the season (or series) is over, what gets them to stay?

The secret lies in building and nurturing a direct, long-term relationship with consumers and meeting their demands on an ongoing basis.

Successful subscription companies focus on stickiness, not ratings. Since “value”
is in the eye of the subscriber, providers must offer a broad range of content that both entertains and is easy to consume. This isn’t easy. And most D2C companies sit somewhere within the five stages of subscription maturity.

Source: Subscription Business Maturity Model, Subscribed Institute at Zuora, 2019


The focus in Stage 1 of subscriptions is on signing up new subscribers above all else, not on keeping them. With no focus on retention outside of creating new hit offerings, the customer experience is inconsistent and churn is typically high. According to the latest Subscription Economy Index, the average churn rate for B2C companies was 24% last year. Wild West companies see rates far exceeding that.


Here, companies begin to build efficiencies that reduce acquisition costs, such as making it easier for new subscribers to sign up in low- touch ways, as well as on service scalability. At this stage, it might be attractive to build relationships with an aggregator such as Apple that can offer scale and reach. However, in exchange, the provider gives up the direct relationship with the customer, as well as control over service and subscriber usage data.


In this stage, there begins to be a strategic focus on retaining subscribers. In the video streaming business, doing so requires compelling and differentiated content. But it also means making it easy to find and consume this content. Structures are put in place to optimize the renewal process, and the concept of a subscriber journey or lifecycle is taking shape.


Companies at this stage have not only developed and articulated customer journeys but are also using data to help manage and drive all aspects of the business. This is why Smart TVs that include the Netflix app must agree to terms that prohibit them from capturing audience data. Customer data is gold in the subscription model. Content providers that are trying to build subscription businesses through aggregators must protect access to service usage data and subscriber preferences to progress to this level of subscription business maturity.

Companies in this stage also offer subscription agility, such as the ability for customers to pause, cancel, or resume services, as well as easily add services or change service tiers. Trust is now a core value and an essential component for moving to Stage 5.


In an optimized subscription business, suppliers and their customers work together to achieve outcomes. There is a clear and systemized cadence of customer contacts focused on building and deepening relationships. A sign of an optimized subscription business: while they continue to sign up new subscribers, the majority of recurring revenue comes from upsells, cross-sells, and renewals.

Companies offering digital subscription services must continually ask themselves—What are subscribers coming to us for? And what will make them stay long after the series is over? With this North Star vision in mind, D2C subscription companies should assess where they are in their subscription business maturity and work towards progressing to the next stage.

With many of the traditional media companies switching to streaming and new services entering the space, it will be interesting to see how streaming companies deal with the competition. There’s no doubt that converting a large percentage of the hit-content fans into long-term subscribers will require a combination of hit content, sticky services, and subscription business maturity.

Continue reading other inspiring stories of digital transformation in the latest issue of Subscribed Magazine!

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