How COVID impacts the Subscription Economy

How COVID Impacts the Subscription Economy

It’s almost the end of 2020. Yet, the coronavirus disease of 2019 (COVID 19) is still ravaging businesses worldwide. It has crippled multiple companies all over the globe and continues to show no sign of stopping. With that in mind, it’s time to start realizing how COVID has impacted businesses – specifically, the subscription economy. That way, business owners will know how to deal with it moving forward.

Getting to the Numbers

To find out more of the results that COVID 19 has caused throughout the year, let’s delve into some recent statistics and research findings. To keep things consistent, we will only focus on studies, surveys, and research that focus exclusively on the subscription industry’s state.

While the coronavirus had a swift and damaging effect on the global economy, some businesses remained open and running. One such area are subscription-based industries.

A recent analysis report made by Zuora focuses on the subscription economy. Titled the “Subscription Impact Report,” this survey shows the current state of subscription-based businesses and how they are evolving to meet with the demands of today’s trends.

In this report, over a hundred subscription-based companies in the country were involved in the research. The results were quite promising. Here are some of the nuggets that we found:

Findings and Data of The Impact

  • Half of the companies involved claim that they haven’t experienced a damaging impact on their subscriber numbers.
  • A quarter of the companies involved are actually seeing an increase in subscriber numbers. In fact, they even claim that the growth rate had accelerated even faster than in prior years.
  • Of the remaining number of companies involved claiming a slow growth on their end, half of them are still growing consistently.

The Subscription Impact Report claims that the subscription economy’s revenue grew by more than 350% for the past seven years. One of the reasons why subscription-based business models are reaching new heights is due to the circumstances people face amid COVID-19. Here are some of the factors that contributed to the steady increase of pay-as-you-go services despite the ongoing pandemic:

  • More people are staying indoors, prompting them to acquire and use subscription-based services.
  • Other economies are crumbling, which paves the way to new opportunities for other industries like a subscription.
  • Many companies are offering their subscription services for a lower price, attracting more customers in the process.
  • A subscription-based business model provides convenience, which is another attractive feature that gets people hooked.

These are just some of the factors listed. There are more reasons COVID hasn’t impacted the subscription economy significantly.


The findings also report that 53 percent of companies have not seen any significant impact on their subscriber acquisition rates. Meanwhile, 23 percent of companies see their subscription rate skyrocket. 13 percent of companies see a slower growth rate, while the remaining 12 percent are starting to see an increase in subscriber churn rate.

Of all the companies going up, down, and staying steady, the study identified four common trends across subscriber-based industries:

  • Accelerating: Communications software, Over-the-top (OTT) video streaming, E-learning, digital news and media
  • Limited Impact: Information services, business-to-business (B2B), and business-to-consumer (B2C) software
  • Slowing: Memberships, software for small to medium-sized businesses, Business and Consumer Internet of Things (IoT)
  • Churning: Sports-related services, travel services

Here are some key findings of each industry that was mentioned in the trends listed above:

  • Subscriptions for OTT video streaming services grew seven times more in the first quarter of 2020, which is more than the previous 12 months. On the other end, sports-related subscription services experienced the exact opposite as their subscription rate fell down significantly.
  • E-learning subscriptions grew three times faster, as did digital news and media.
  • Communications software-as-a-service (SaaS) companies like online collaboration tools or video conferencing have seen a positive spike in their subscription rate by 1.4 times.
  • Meanwhile, small-business SaaS companies fell by half, with B2B software remaining unchanged.
  • Consumer memberships like travel, clubs, and gyms experienced a slow downturn. Throughout the year, their consumer number fell by two-thirds compared to last year.
  • Consumer and Business IoT industries saw a rapid deceleration in their subscription numbers. Both experienced one-third and half of the growth rate from 2019.
  • Travel and hospitability took the worst hit, plummeting their subscription numbers by a significant rate since March this year.

What’s Next for the Subscription Economy?

While it wasn’t a total loss for subscription-based businesses, there were still negative effects that impacted a number of industries. That’s why some adjustments and drastic changes are needed moving forward.

Moving on, leaders and business owners must recognize and acknowledge the changing world amid today’s health and economic crisis. In turn, they should make better decisions and investments that underscore what will help them and their companies afloat. By doing so, they will remain agile and nimble as the world continues to battle COVID-19.

History, along with the Subscription Impact report done by Zoura, shows that the subscription business model is a resilient one. Despite the global economic downturn, the subscription economy remains unscathed.

However, it doesn’t imply that subscription-based businesses should take their position for granted. If anything, they should remain cautious and continue to look for ways to keep their subscriber base growing.

We suggest a subscription-based business to continue innovating and providing new value to their customers. Meet with new and evolving demands and satisfy customers’ needs to stay on top and afloat amid the ravaging pandemic.

For struggling businesses that are having a tough time making ends meet, now is the time to consider shifting to a recurring revenue business model. The statistics presented in this article shows how effective this business model can be, no matter the situation.

Wrapping up

While no one can truly predict what the “new normal” would be in the coming months, we highly urge all companies to try to take a leap and figure it out. If you want your business to survive during these tough times, try to adapt to the current trends. Understand what is changing – both for better and for worse – and anticipate the implications that they will have on your business moving forward. That way, you can spot opportunities to innovate and look for ways to ensure in moments of crisis. For more posts like this, visit ReliaBills.

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