Despite the shutdown of sports events amid the pandemic, a subscription-focused start-up The Athletic managed to grow from 600,000 to 1 million subscribers. How? 

The recent announcement by Adam Hansmann, co-founder of The Athletic, came as a surprise. While demand for news spiked during the COVID-19 pandemic and many general news sites saw a bump in online traffic and subscriptions, the sports media actually suffered. For example, ESPN and Fox shrunk programming. No wonder — sporting events around the world were cancelled or postponed and whole seasons were suspended. 

The Athletic adjusted its coverage from news to entertainment in the form of “nostalgia, culture, and people behind the games we love.” According to the Similarweb estimates, the visits to its site decreased 33% in March and 45% in June, all compared to January 2020. 

By June, the Athletic reportedly saw a decline in its subscriber growth, introduced “extreme cutbacks” on marketing spend, laid off nearly 8% of staff, got rid of freelancers, and cut the salaries by 10%.

In such challenging circumstances, retaining the current base of subscribers would be a success. The Athletic, though, said it managed to double it.

Scaling during the pandemic 

My analysis of promotional activity of The Athletic suggests it might have grown its base with a number of aggressive pricing and referrals. 

• Firstly, it slashed the price for new subscribers of US$7.99 per month. Initially, it extended a free trial from seven to 90 days. Later, it offered access for US$1 per month for 12 months.
• Secondly, it granted its current subscribers free guest passes to give away to friends — for example, a June benefit included five passes for 30 days.
• Thirdly, it gave away a free one-year subscription to all customers of telecom operators T-Mobile and Sprint. The Athletic reportedly receives no money from the telecoms.
• Fourthly, it signed a deal with Bloomberg to sell a bundle of business and sports news access. Buyers of a US$290 annual subscription to Bloomberg.com get a free six-months trial to The Athletic.

Engagement and monetisation challenge 

Aggressive acquisition tactics seem to have helped The Athletic weather the storm and maintain the growth rate, but they are likely to challenge the key metrics — the retention rates and average revenue per user. 

• Trials definitely help selling subscription, but — according to the benchmarks from Piano — readers on a free trial convert at half the rate of those on a paid trial.
• The Athletic is likely to observe a deep drop in its retention rates (reportedly, 80% after one year vs. the news industry average of 45% for monthly contracts).
• The free and deeply discounted offers are likely to impact significantly the ARPU and slow The Athletic’s “virtuous cycle,” in which recurring revenue funds the further growth.
• Before the pandemic, at the level of 600,000 subscribers, the start-up saw its annual ARPU at US$64. After acquiring 400,000 new subscribers with free trials or annual plans for US$12, it’s likely to be less. 

Ability to retain readers and charge them a premium matters, as these were, according to the investors such as Bedrock Capital, the fundaments of the business model that attracted US$140 million of funding for The Athletic.

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