Subscriptions are taking the world by storm, and the shift is most visible in the entertainment space. A new report has revealed that subscriptions are now largely at the centre of entertainment consumption in the UK. Shashank Venkat presents the details.
According to new data revealed by trade group The Entertainment Retailers Association (ERA)
, the UK is increasingly becoming a subscription nation. British audiences prefer the likes of Netflix and Spotify, instead of traditional entertainment alternatives. Last year, streaming subscription revenue in the UK crossed £829 million ($1 billion), a 38% jump over 2017. Little wonder that this new generation of content consumers has been dubbed ‘Generation Rent’!
A closer look at music streaming highlights the consumer shift towards subscriptions. In 2018, total music sales in the UK was £1.3 billion ($1.7 billion). These numbers include ‘owned’ formats such as CDs, DVDs, Vinyl LPs and even digital downloads, in addition to subscriptions. Not surprisingly, subscriptions own the lion’s share (62%), of this recorded music spending in the country.
Millennials are increasingly less concerned about owning their music and movies, preferring to curate them on user-friendly platforms. The report also points out the fact that for the first time in the entertainment industry, more revenue is being generated through payments for access, instead of direct purchases.
The shift towards subscriptions in the entertainment space was originally driven by the games market
. Services such as XBox
Live and Playstation Plus have dramatically transformed the gaming landscape through a recurring fee for access to online multiplayer components.
SVOD services have become extremely popular since 2017, and video streaming services such as Netflix and Amazon Prime Video are increasingly the preferred medium of choice for many consumers. Little wonder that traditional broadcaster the BBC just partnered with ITV for a new BritBox streaming service
Interestingly, a big reason for the shift in preference towards music streaming is the rapid rise of voice-activated smart speakers such as Amazon Echo
. As these smart home systems become more ubiquitous, expect these services to gain a higher percentage of the entertainment pie.
Overall, entertainment revenues have grown for a sixth straight year and stand at a high of £7.5 billion ($9.8 billion) according to the report. Subscriptions are now the de-facto business model for most successful businesses in the entertainment industry, and newer players would do well to become subscription-first businesses, rather than the other way around.
At Cerillion, we have been helping media & publishing businesses make the shift towards a subscription model through our own recurring billing system. Do check out our case study on how Cerillion Skyline fast tracked the subscription transformation of English Language Media.