The Cushioned Covid Impact on Subscription Businesses

Covid has not been kind to the world, personally and professionally. People across the world have lost their lives and livelihoods. Innumerable businesses have been shut down.

But if there’s one business that has stood the test of times, it’s the subscription business. The first quarter of S&P 500 companies’ sales saw a 1.9% decline, while subscription businesses grew by 9.5% during the same period.

Industries Where Subscription Businesses Had A Smooth Sail

While some companies maintained a steady growth rate, many companies experienced accelerated growth in their business, thanks to the global lockdown. Let’s take a look at some of the areas where subscription businesses fared well.

Digital News

With the growing uncertainty of Covid numbers, users were restless for constant updates that they could get on their smartphones. As a result, digital news subscriptions grew by almost 110%.


Staying at home left very little avenues for entertainment and refreshment, and users turned to OTT platforms like Netflix, Hulu, Amazon Prime, etc. for content consumption. With no dearth of options to choose from, the global streaming market size was estimated to be around $50.11 billion during the pandemic in 2020.


Schools and colleges were shut globally, and educators switched to online education. But this came with its own set of challenges. Students and teachers were required to install multiple softwares to make the online learning experience efficient, and the e-learning software subscriptions grew manifold during this period.

B2B softwares

Since offices were also shut during Covid-19, work from home became the new norm. Meetings started taking place virtually, and meeting applications that allowed multiple participants to interact in real-time and make presentations became the need of the hour. Platforms like Zoom capitalized on this opportunity and eventually grew 4x in two quarters straight, earning around $777.2 million in the third quarter of 2020.

Why Did Subscription Businesses Not Suffer?

There are three main reasons why subscription businesses were not hit hard.

Recurring revenue

It can be difficult going looking for newer customers when the economy is suffering. But you’ll always have revenue flowing in from your loyal customers, who pay you money every cycle, to continue using your services. You can set up your subscription billing software to take care of these recurring payments.

Scaling Ability

Unlike businesses that require colossal infrastructure to scale, scaling subscription businesses is pretty easy. Just add in a few bandwidths, server, and network capabilities, and you’re good to go. The scaling ability of these businesses makes it easy to implement new features in almost no time, keeping their users happy.

Customer Relationships

Subscription businesses have placed a huge emphasis on customer relationships. With the power of data analytics, they’re able to provide newer functionalities and improve on features that are not working without actually asking the users, ensuring customer loyalty. If your users are happy, they’ll stick around with you; else the switching cost is so low that it’s very easy for competitors to poach them.

why did subscription business not suffer

The Cushioned Covid Impact on Subscription Businesses

Covid-19 has probably been the worst crisis after the Great Depression. But subscription businesses have managed to dodge the bullet. Their focus has been on how to tackle the slow growth rate rather than falling revenues. With the right strategy, these businesses can witness accelerated growth in their business without worrying about how the pandemic will continue to negatively impact them.


  • Ajay Jain

    Ajay is the Director - Business Development at Magnaquest. He is looking at various domains including strategy, go-to-market, core marketing and product marketing. Ajay comes with a rich and varied experience of the semiconductor industry, education and startup consulting. He has an experience of over 16 years in both corporates and growth-stage startups. He has double Masters – MS from University of Arizona and MBA from Indian School of Business.