And subscription sales across industries largely remains resilient even amidst the pandemic.

In 2019, SEI media revenue growth rate was nearly double that of S&P 500 Sector Revenue, with modest increases in subscriber sign-ups and high churn. In the first half of 2020, the revenue growth of subscription media companies continued to climb, faring better than non-subscription companies — but has begun to slow down.

It seemed logical to think that shelter-in-place orders would have been a boon for over-the-top (OTT) streaming services as consumers hunkered down at home, hungry for new content (and with extra time to enjoy it). The assumption was that sign-ups would increase while churn would be reduced. But there are more factors at play, contributing to slowed sector growth. In prior years, OTT has driven media’s upward trend in revenue growth, through net account growth. In fact, according to Nielsen, 60% of consumers subscribe to more than one paid streaming service, and 93% plan to increase or keep their current streaming services. However, following a brief surge in new accounts in the early weeks of the pandemic, sign-ups fell, declining at a rate of 18.7% by the end of Q2. Churn rose considerably too, reaching rates above 40%. This could be due to a lack of new content being created (particularly for those OTT services offering sports entertainment), or because consumers, under pandemic-related financial stress or job displacement, were reducing their entertainment spending.

The pandemic has also accelerated the trend of falling advertising revenue and a rise in digital subscriptions. An IAB survey from April 2020 found that 98% of ad sellers, including publishers, anticipated a decrease in U.S. ad sales revenue, compared to their pre-Coronavirus expectations. Publishers that began leveraging digital subscription revenue models early on have fared well.

The New York Times, for instance, began charging users for subscriptions in 2011, and, according to the Reuters Institute, it accounts for 39% of media subscriptions in the United States. In February 2020, The New York Times announced that their revenue from digital subscriptions was accelerating and they expected a shift away from ad-generated revenue in favor of revenue from digital subscribers. Meanwhile, many other publishers find themselves in a battle for market share or exploring creative solutions to stay alive. Subscription models are an invaluable tool for publishers to demonstrate real value to consumers of mainstream news. Without a doubt, publishers who aren’t using digital subscriptions should start. According to the American Press Institute, younger adults (aged 18-34) are 5 times less likely to buy print over digital subscriptions than those 65 and older. While the Reuters Institute report points to an increased consumption of mainstream news due to COVID-19 coverage, the uptick mainly appears for television and social media, not newspapers. The same report found that 40% of people in the U.S. and 50% in the UK won’t subscribe because free news is “good enough.” In fact, according to Poynter, COVID-19 forced more than 50 newsrooms across the country to close. Publishers lucky enough to be staying float should pay attention as we race to year’s end. So far, the pandemic has not increased churn rates for publishers in the SEI. At a rate of 26.2% in Q2, account churn for subscription publishers was within one percentage point of recent rates in the sector and within one percentage point of the SEI’s average account churn: 25.7%.