Next Digital looks to subscription as major revenue source

August 14, 2019 12:31
Next Digital aims to boost revenue with its new subscription business model. Photo: Reuters/Internet

After a two-month beta testing of its paid subscription business model, Next Digital has announced the official pricing for its Apple Daily online editions in Hong Kong and Taiwan.

The new subscription model, which will start on Sept. 2, could generate significant revenue for the embattled media group, which has been feeling the pressure of an advertisers' boycott resulting from its anti-Beijing stance.

Apple Daily announced the pricing in its print edition on Monday by running a full front-page advertisement with the Chinese words for “black” and “white”. The message is that Hong Kong needs an independent and outspoken media during these times of social unrest. The subscription fee amounts to HK$1.68 per day.

In another full-page advertisement, Apple Daily elaborates on the service packages for its readers. All current members who paid a HK$3 one-off fee from mid-June will be automatically upgraded to general subscriber. Their monthly subscription fee will be HK$50.4, which will be charged automatically without contract. For those who want to pay once a year, the annual subscription fee is HK$604.8, which will be also charged automatically once a year without any contract. Compared with HK$10 per copy of Apple Daily's print edition, the pricing of its online edition is quite a deal, although it's not the cheapest in the market.

The success of the subscription model will depend on readers’ support. For Apple Daily, subscriber growth has been slower than expected. It took two months for the number of subscribers in Hong Kong to reach the 800,000 level. Still, the newspaper expects to have a million paid subscribers in Hong Kong, making it the most successful online subscription service in the city.

Growth has been hindered by many external factors such as bad weather and the ongoing mass protests. Still, the 800,000 subscribers in Hong Kong, who pay an average fee of HK$1.68 per day, could generate around HK$490 million each year.

In Taiwan, the situation is far below expectations. The Taiwan Apple Daily online edition has so far attracted less than 200,000 subscribers, who paid a one-off subscription fee of NT$10 (32 US cents) during the trial period. After that, subscribers will be charged NT$120 per month or NT$1,150 per year. 

That means Taiwan readers of Apple Daily will pay less than HK$1 each day, which is quite a bargain when compared with what Hong Kong subscribers are paying. If Taiwan Apple Daily maintains its 200,000 subscribers, it will be assured of annual subscription revenue of around HK$57.6 million.

So based on its current paid subscription numbers, Next Digital's combined digital subscription revenue will reach HK$547.6 million.

Last year, the group posted revenue of HK$1.3 billion, which means the addition of HK$547.6 million in subscription fees could bring its combined revenue to more than HK$1.8 billion.

The group's digital business, in fact, could become the group’s largest revenue source. Including online advertising sales, digital revenue could reach more than HK$1.14 billion or 63 percent of group revenue. That could surpass revenue from its traditional print businesses in Hong Kong and Taiwan.

The key challenge for Next Digital is how to deliver consistently better content than rivals. Observers point out that Apple Daily is tailored for the mass market and most of its content is also offered by other media outlets such as Oriental Daily News and in Hong Kong. But its distinctive anti-Beijing slant is one reason that is driving its subscription growth as many Hong Kong readers are willing to pay to demonstrate their support for its political stance.

However, this doesn’t seem to work in Taiwan as evidenced by the paper's slow subscription growth in that market. Apple Daily has yet to establish a clear brand image among Taiwan readers. In Taiwan, newspapers are often seen as either pro-Beijing or pro-independence. On the other hand, it is not clear whether Apple Daily supports the Democratic Progressive Party or the Kuomintang. That could affect its subscription model.

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EJ Insight writer