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Covid data, finally! Many (early) signs to be OPTIMISTIC...

I hope you all had a lovely and sunny Easter Weekend! Let's kick this week off with some good news. While the first curves have started to flatten across Europe and some parts of the continent are partially going back to work this week, the latest business data suggests that things are not that bad, after all.


In a previous post, I have written about the potential winners of this downturn. End of last week, Zuora has been one of the first to open a rare window into primary data on the impact of COVID-19 on subscription businesses.


There are many reasons to be optimistic. Here is why.


The worldwide spread of COVID-19 has had a quick and damaging effect on the global economy and many startups. However, subs businesses are proving to be resilient.


More than half of subscription-based companies have not seen any substantial impact on their subscriber growth.

One-quarter of them is even seeing subscriber acquisition rates accelerate faster than before. The remaining are seeing their growth slow, but half of these are still growing.



Here some key takeaways.

Limited Impact:

It is great to see that the majority of the B2B (enterprise & mid-market) and B2C software companies are experiencing a limited impact. Based on the experience with our portfolio, this is mainly due to some longer sales cycles and purchasing delays.


Slowing Growth:

About 13% of the subscription companies are slowing down, meaning that they are still growing but saw growth slow down by more than 25%.

Consumer IoT has been hit the hardest, and their growth was reduced by over 70%. With people stuck at home, no one is in a rush to buy services such as home thermometers.

The growth of SME software and Business IoT services was only reduced by half. Small businesses such as restaurants, dentist offices, retail shops, etc. are struggling to stay open, while office buildings are vacant, and construction sites empty. Offerings that cater to those companies are therefore seeing a halt in sign-ups and an increase in cancellations.

Finally, memberships are experiencing the lowest decline growing at two-third the rate of the previous year. Many gyms, clubs, and other class providers of all sizes come up with great online offerings around the world.


Contracting Growth:

Travel services and services related to live sports events are having the hardest time. Let this sink in... Weekly bookings on Airbnb dropped by 80% from the beginning of March to the end of April! But, we are seeing the light at the end of the tunnel as people can't wait to travel again.


Over 20% of subs businesses are accelerating!

The big winners of the lockdown are online content and communication providers. Subs are growing all over the place: 7x for OTT streaming services, 3x for digital news and media, 2.9x for online education (more on this another time), and 1.4x for communications software, with Zoom, Teams and G hangout being the massive outliers. Many of these services are leveraging the situation through unique offerings such as extended free trial periods, better prices, lifelong packages, and the list goes on.


The biggest winner of them all might be Disney+, as streaming has become the world’s primary source of entertainment. I can still hear the experts shout there is no more space for new streaming players when the service launched five months ago. Since, the company has attracted 50M subscribers around the world, twice the February figures! This compares with Netflix's 167M user base built over ten years.



Disney+ has accrued 14M downloads in the US in 2020, which is the most of any streaming app. Of course, the existing providers already have a broad base, but still, this is impressive...



As you can deduct from the chart above, not all online content providers are witnessing a surge in subscriber sign-ups. While traffic to all news sites is through the roof, revenues are not. In fact, primarily ad-driven media sites like Vice are being hammered as ad budgets have fallen off a cliff. Walmart and Amazon are already pulling out of commerce marketing deals with sites like Buzzfeed... But, why are some brands able to convert viewers into subs and others not? Well, trust in their content, a trust that has been nurtured by a long term subs strategy. When we sign-up for Netflix or the NY times, we know that we will get good original content at an affordable price. It will be interesting to watch how the media world evolves, #consolidation.


Below is a picture of my Sunday run. I can't wait for our economy to blossom again and to get my hands on the first quarterly earnings reports. Meanwhile, let's use this time to do things that we usually don't have time for. This crisis might disappear as quickly as it arrived.


Life is awesome,

Yannick



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