I have to make a confession: I binge.
If I find a new TV series I like, I could easily watch all the episodes of all the seasons in a matter of days. For me, imagining a world without Netflix — or similar subscription-based streaming services — is almost impossible. But such a world existed — and not too long ago.
Netflix was introduced to the Norwegian and Swedish markets in 2012,after launching its streaming service in the United States in 2007. In 2015, Netflix had grown to 70 million subscribers. Today, it has more than 200 million. When the new streaming service Disney+ launched on the American market in 2019, it amassed 10 million subscribers in just one day. A year and a half later, it has grown to 100 million.
It is almost difficult to comprehend the massive growth subscription-based services have seen over the last few years. Internationally, more than seven out of 10 consumers subscribe to one or more services, and the number is growing. The growth is largely driven by consumer demand: Consumers want the convenience, flexibility, and frequency that subscription models offer.
For businesses, the attractiveness of the subscription model is reflected in revenue growth. According to the Zuora Subscription Economy Index, subscription-based businesses have increased their revenues by more than 400% in the past 8.5 years, significantly outperforming their peers.
Even in the face of the COVID-19 pandemic, subscription-based companies demonstrated a revenue growth rate of 12%, against a growth rate of -1.6% for their product-based peers, according to figures from last year. As a result, a growing number of industries and businesses are adopting the model.
Subscription at Schibsted
Schibsted has been in the subscription game for a long time, and we’ve seen unparalleled growth in digital media subscriptions over the last few years. As the pandemic swept our countries, the hunger for news, information, and entertainment drove our subscription figures to new heights: As of March 2021, we have more than 880,000 digital subscribers across our Norwegian and Swedish brands. The appetite for digital news subscriptions has never been greater.
However, subscription is no longer a game that only media brands can play. Industries as diverse as mobility and home appliances are increasingly adopting subscription as a business model. Today, you can subscribe to products and services as diverse as a car, dishwasher, and unicorn-themed “mystery box.” Whatever your niche is, there is a subscription for you.
At Schibsted, we are following this widespread adoption of subscription-based models closely. A division at Schibsted investing in digital start-ups is increasingly looking at and making investments in subscription-based services, including the podcasting platform PodMe and the math-learning platform Albert. Our marketplace division is looking into subscription-related opportunities too, including testing a marketplace for car subscriptions at FINN.no.
We see that the subscription-related expertise and experience we built up for years within our media division can be utilised in new ways in very different parts of our organisation. Our goal is no longer just to increase the number of media subscriptions we have but to have more subscription-based business throughout Schibsted.
We also want to deepen the relationships we have with subscribers today by offering them subscriptions that provide them with more relevant, products, services, and content. Being subscription-driven is about catering to genuine user needs and wants.
The end of ownership
So, what do users want? Well, no matter the type of product or service, they will most likely prefer the option that is simple, convenient, and easy to understand. Owning a product is often none of these things. In fact, product ownership is often a hassle.
Owning something means you have to pay upfront for a product that you do not know how many times you will actually use. Owning something might mean you have to pay for or spend time maintaining that product. And in the age of rapid innovation and technological advances, owning something might also mean the inevitable frustration of watching your product become obsolete as new innovations enter the market.
So, fundamentally, most of us very rarely actually want to own something. Rather, we want access to what that product or service can offer us that is of value, just when we need it. Take washing machines as an example. Do you really need to own a washing machine? Or, do you need your clothes to be clean, at a reasonable cost, with minimum effort?
Increasingly, research suggests consumers favour “access over ownership” and wish they could “own less stuff.” This trend is often known as “the end of ownership.” And as ownership ends, so begins the era of usership, where focus is on using and paying for what you need rather than necessarily owning it — just like with subscription-based products.
From a business perspective, the end of an era that has served business owners and shareholders well might seem intimidating. However, rather than being threatened by change, we believe the joint trends of usership and subscription will result in vast opportunities going forward for both Schibsted and others — within existing businesses, across businesses, and within new product areas.
Schibsted has a strong foundation to build on. And by using our assets smarter and investing in the subscription economy, we believe we can secure existing business, create opportunities for future growth, and, most importantly, cater to genuine user needs.