How are subscription businesses weathering economic headwinds?

Rajeev Raman

May 2, 2023

As the economy faces unprecedented challenges, subscription businesses must find innovative ways to adapt. AT&T sold HBO Max to Discovery, Viacom integrated Showtime into Paramount Plus, and Netflix is cracking down on password sharing. What can we do as growth marketers and product executives to weather this storm? In this article, we'll explore the strategies subscription businesses use to thrive in today's uncertain environment. From user engagement to evolving business models, we'll cover the key factors driving success in this dynamic industry. 

But first, here are a few potential impacts of a slowdown:

  1. Customer Churn: More customers will cut back on expenses and may decide to cancel their subscription services. 
  2. Customer Acquisition: In a slowdown, it may be more difficult for subscription businesses to acquire new customers, and conversion rates from traditional acquisition channels will decrease.
  3. Pricing Pressure: Subscription businesses may face pricing pressure during an economic slowdown as customers look to reduce their expenses. Gone are the days of raising your subscription price every six months or annually.
  4. Reduced Funding: Subscription businesses that are not profitable will face spending reductions and layoffs.

So what choices can you make to be well positioned to survive during this downturn? Now, more than ever, you must pay attention to new users. Their initial impression of your service starts the exchange of value for fees. It is fair to state that paid visitors need extra handholding.

Simplify the user experience. Value does not mean overwhelming the user with more content. Studies show that an overabundance of items irrelevant to the customer creates a strong negative sentiment. I know I can relate to that.

Connect entitlement with consumption. Every subscription business has a list of benefits under a plan. Does your business work with the customer to ensure they take advantage of their entitlements in a personalized and contextual manner?

It's easy to agree with the above. What is hard is how to put it into practice. Until a few months ago we helped our customers do this for their 50 million MAUs. With the most recent addition of one of the largest subscription services in the world, we now do this for 100 million MAUs.

We would be happy to tell you what we do for them and how we do it.

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