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What You Need to Know about Scaling a Subscription Business


What You Need to Know about Scaling a Subscription Business

Robbie Baxter shares  a summarized chapter from her forthcoming book The Forever Transaction, which explores the obstacles and strategies of building and growing a subscription business.

Any business that has been around for two centuries knows something about adapting to changing marketing conditions. Bonnier AB is a private-held Swedish media company that was founded in the 19th century, and is now using a subscription model to tackle the challenges of the 21st century media landscape.[1] The company created the C More Entertainment Group, a streaming service that leverages the strength of their TV4 ad-supported television powerhouse. Facing local competition as well as international threats like Netflix and Amazon’s Prime Video, the organization focused on a relatively narrow catalog of uniquely Scandinavian content, including soccer, regional movies and series, and hyperlocal and beloved news and children’s programming. By 2017, C More Entertainment had hundreds of thousands of paying subscribers; they also had a significant base who’d canceled their subscriptions. The company wanted to double the number of subscribers who were paying for both TV4’s traditional services and C More. They brought me in to help them strengthen engagement and retention.

When we took a closer look, we found several issues. Prior to 2017, they’d had subpar streaming technology—many subscribers canceled for operational reasons. Since then, the company had invested in industry-leading streaming quality, but that message hadn’t reached all of the lapsed subscribers. A second issue was the fact that they solicited new subscribers by marketing a blockbuster movie title or a playoff match. This tactic attracted people who would “smash and grab”—sign up, watch the movie and then cancel before paying. Many of the people who loved their offerings most, older fans of local content, weren’t proficient using the streaming service and needed help making it a habit. Finally, C More was competing for resources with the traditional ad business of the parent company, rather than building a unified strategy for long-term service of their best customers. None of these issues was a huge problem on its own, but together they exerted a significant downward pressure on revenue.

You’ll face many challenges when scaling up your forever transaction. These setbacks might seem unique to your organization, but they are somewhat predictable. Ultimately C More scaled successfully, but first they had to slow acquisition and focus on Customer Lifetime Value, improve their streaming technology and tighten trials. In 2019, C More is one of the most popular streaming services in Sweden. In 2018 C More and TV4 were acquired by the telco Telia for 10 billion SEK (about $1B USD), which was a good exit for all. Although the company had a rough start and initially underestimated what was needed to succeed, they pulled it off in the end.

Key points include:

  • Organizational and Skills Gaps
  • Cannibalization Concerns
  • Technology Setbacks

Read the full article, The 6 Most Common Setbacks Faced by Scaling Subscription Businesses…and How to Recover, on LinkedIn.