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June 25, 2019
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Subscription fatigue hasn’t hit yet

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U.S. consumers are still embracing subscriptions. More than a third (34%) of Americans say they believe they’ll increase the number of subscription services they use over the next two years, according to a new report from eMarketer. This is following an increase to 3 subscription services on average, up from 2.4 services five years ago.

The report cited data from subscription platform Zuora and The Harris Poll in making these determinations.

The study also debunks the idea that we’ve reached a point of subscription fatigue.

While only a third is planning to increase the number of subscriptions — a figure that’s in line with the worldwide average — the larger majority of U.S. internet users said they planned to use the same number of subscriptions services within two years as they do now.

In other words, they’re not paring down their subscriptions just yet — in fact, only 7 percent said they planned to subscribe to fewer services in the two years ahead.

However, that’s both good news and bad news for the overall subscription industry. On the one hand, it means there’s a healthy base of potential subscribers for new services. But it also means that many people may only adopt a new subscription by dropping another — perhaps to maintain their current budget.

Subscriptions, after all, may still feel like luxuries. No one needs Netflix, Spotify, groceries delivered to their home or curated clothing selections sent by mail, for example. There are non-subscription alternatives that are much more affordable. The question is which luxuries are worth the recurring bill?

The survey, however, did not define subscription services, which could include news and magazine subscriptions, digital streaming services, subscription box services, and more. But it did ask about consumers’ interest in the various categories.

Over half of U.S. consumers (57%) said they were interested in TV and video-on-demand services (like Netflix) and 38 percent were interested in music services.

Related to this, eMarketer forecasts U.S. over-the-top video viewers will top 193 million by 2021, or 57.3 percent of the population. Digital audio listeners will top 211 million by the same time, or 63.1 percent of the population.

The next most popular subscriptions in the survey were grocery delivery like AmazonFresh (32%) and meal delivery like Blue Apron (21%). Software and storage services like iCloud and subscription beauty services like Ipsy followed, each with 17 percent.

Consumers were less interested in subscription news and information and subscription boxes — the latter only saw 10 percent interest, in fact.

The figures should be taken with a grain of salt, of course. The meal kit market is actually struggling. The consulting firm NPD Group estimated that only 4 percent of U.S. consumers have even tried them. So there’s a big disconnect between what consumers say they’re interested in, and what they actually do.

Meanwhile, the supposedly less popular news and information services market is, in some cases, booming. The New York Times, for instance, just this month posted a higher profit and added 223,000 digital subscribers to reach 4.5 million paying customers. And Apple now has “hundreds of people” working on Apple News+, it said this week. 

Of course, consumers will at some point reach a limit on the number of services they’re willing to pay for, but for the time being, the subscription economy appears solid.

 

eMarketer predicts digital ads will overtake traditional spending in 2019

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This is the year when the money spent on digital advertising will finally overtake spending on traditional ads — at least according to the latest forecast from eMarketer.

The research firm is predicting that U.S. digital ad spend will increase 19.1 percent this year, to $129.3 billion, while traditional advertising will fall 19 percent, to $109.5 billion. That means digital will account for 54.2 percent of the total, while traditional will only represent 45.8 percent.

Not surprisingly, most of the digital ad money is going to Google and Facebook . However, eMarketer says Google’s share of the market will actually decline, from 38.2 percent last year to 37.2 percent this year, and Facebook’s share will only grow slightly, from 21.8 percent to 22.1 percent.

Apparently, Amazon is the main beneficiary here, with its U.S. ad business set to expand by more than 50 percent, accounting for 8.8 percent of total spend.

“The [Amazon] platform is rich with shoppers’ behavioral data for targeting and provides access to purchase data in real-time,” said eMarketer forecasting director Monica Peart in a statement. “This type of access was once only available through the retail partner, to share at their discretion. But with Amazon’s suite of sponsored ads, marketers have unprecedented access to the ‘shelves’ where consumers are shopping.”

The firm also forecasts that by 2023, digital will account for more than two-thirds of total ad spending.

Report: Smartphone usage set to overtake time spent watching TV in China

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2018 is the year that smartphone usage eclipses time spent watching TV in China and it’s all down to the growth of digital video platforms, according to a new report from eMarketer.

You’d be forgiven for thinking that this had already happened in China, which happens to be the world’s largest smartphone market, but eMarketer forecasts that the momentous moment is about to arrive.

According to the report, the average adult in China is set to spend 2 hours and 39 minutes per day on a mobile device this year, up 11.1 percent on 2017. Watching TV, meanwhile, is set to fall by two percent to reach 2 hours 32 minutes daily.

eMarketer said that the growth of digital video services is “a key driver” in this change. The company forecasts that online video time per day will leap 26 percent year-on-year to reach 58 minutes per adult on average. It is further predicting that by 2020 China’s adult population will spend one-third of their time online watching videos.

The signs have been pointing to digital media’s charge in China for some time, with the country’s top firms putting considerable cash behind the leading players.

Alibaba acquired Youku Tudou in a 2015 deal that valued the YouTube-like service at $4.6 billion, while rival Tencent has its own ‘Tencent Video’ service and Baidu — the third part of China’s traditional tech power trio — incubated video service iQiyi before taking it public in a U.S. IPO that raised $1.5 billion earlier this year. All three of these streaming platforms combine user-generated video with produced series, some of which comes from Netflix.

Beyond those three, there are also vertical focused video services which include animation platform Bilibili (which just went public in the U.S.), live-video platforms such as Tencent-backed Kuaishou, and Chushou, which focuses on e-sports and landed investment from Google earlier this year.

Video may be the key driver, but it is far from the only reason that keeps Chinese people glued to their phones. Chat app WeChat is the stickest of all mobile apps in China. It claims to have over 900 million active users who send 38 billion messages and over 205 million phone calls via the app each day.

WeChat also includes offline payments which are another major use for smartphones in China. Alongside WeChat Pay, Alibaba’s Alipay claims over 520 million users who use its service instead of cards or cash when paying for goods.

Ant Financial, Alipay’s parent company, is being tipped to raise $9 billion in new funding at a valuation that could reach as high as $150 billion.

Hat tip @sirsteven

Teens favoring Snapchat and Instagram over Facebook, says eMarketer

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Facebook is losing appeal among teens and young adults which is contributing to generally slowing growth for the platform, according to the latest projections from research firm eMarketer.

At the same time alternative social apps Snapchat and (Facebook-owned) Instagram are seeing rising and double-digit growth in the same youth demographic — suggesting younger users are favoring newer and more visual communications platforms.

“Both platforms have found success with this demographic since they are more aligned with how they communicate — using visual content,” noted eMarketer forecasting analyst Oscar Orozco in a statement.

It’s the second consecutive year of expected usage declines for Facebook among this advertiser-coveted group, according to the researcher.

eMarketer suggests some tweens are even skipping adopting Facebook entirely (it calls them “Facebook nevers”) and going straight to the rival platforms, even as remaining tweens and teens appear less engaged on Facebook — logging in less frequently and spending less time on the platform.

While having slipping relevance among a coveted ad demographic is obviously not good news for a social behemoth whose business is dependent on ad revenue, Facebook does have the consolation of also owning one of the two main youth-friendly alternative platforms: Instagram. (Aka, ‘if you can’t be it, buy it’.)

Still, eMarketer is also projecting that the acquisition that got away from Zuck, Snapchat, will overtake Instagram and Facebook in the total teen (12 to 17) & young adult (18 to 24) ages for the first time in 2017 — boosting its share of US social network users to 40.8 per cent, and projected to push close to a majority by 2021. (Though Instagram is also forecast to maintain its greater reach through this timeframe.)

Back in 2013, when reports of Facebook’s spurned acquisition attempts of Snapchat surfaced, it followed fast on the heels of the company reporting a first-time decline in young teens using its service daily.

Nearly four years later Facebook’s problem with keeping teens happy has only got bigger — but the company’s success at using Instagram to successfully clone Snapchat’s features has helped mitigate the issue. (Even if it means Facebook’s corporate motto should really now read: ‘Move fast and clone things’.)

eMarketer couched U.S. Facebook usage in the 12 and 17 age-group as dropping the most “precipitously” — noting that while 81.9% of social network users in that age range are projected to use Facebook this year, the figure will slide to 76.2% by 2021.

Other highlights from eMarketer’s forecast:

  • Facebook usage in the US in the 12 to 17 age group will fall 3.4% vs 2016, to 14.5M, accelerating from the 1.2% slip seen last year
  • Facebook’s US monthly users overall are expected to grow 2.4% this year to 172.9M — up slightly on the prior forecast due to increased adoption by older Internet users
  • Snapchat’s US monthly users are expected to grow 25.8% in 2017 to 79.2M monthly, with growth figures adjusted higher for all but the oldest age group, and the biggest upward revision for the 18-to-24 group which is forecast to see usage escalate 19.2% this year
  • Instagram’s US monthly users are expected to grow 23.8% in 2017, up from prior forecasts, to 85.5M, expanding its user base among under 12s by 19%, and 12 to 17s by 8.8%

  • In the UK, Facebook is estimated to have 32.5M monthly active users this year, remaining the most popular social network, even as it also loses share to Snapchat and Instagram among younger age groups there
  • In the UK, Instagram is projected to have 16.7M monthly users in 2017, an increase of 34.8% over 2016 — and a total reach amounting to more than a quarter of the UK population (the same as its reach in the US)
  • In the UK, Snapchat is projected to have 14M monthly users, with growth of 20.2% expected this year (meaning it will reach around a fifth of the population)
  • While Twitter’s total UK user base is expected to be 12.6M this year

eMarketer’s methodology counts a monthly user as someone who is accessing their account at least once per month, consistently, each month throughout the calendar year. It says it bases its forecasts on analysis of quantitative and qualitative data from research firms, government agencies, media firms and public companies, along with interviews with senior execs at publishers, ad buyers and agencies.

Featured Image: CREATISTA/Shutterstock

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