Spotify announced in July that it had hit 60 million paying users. GP Bullhound sees this hitting 100 million by mid-2018, quicker than it had originally thought. And by 2020, the user base could hit 500 million, with 200 million users being premium subscribers.

This will be achieved by penetrating new markets, but along with that will come fewer paying subscribers as a percentage of total users, and perhaps lower average revenue per customer, due to a dilution effect of cheaper subscription plans.

“Spotify have introduced family plans and student discounts and if we factor in that emerging markets have a much lower average revenue per premium subscriber we believe that Spotify will see a steady decline in revenue per premium subscriber moving towards 2020 compared to today’s value,” GP Bullhound said in its report.

“This is the reason why we have decreased our estimated average revenue per premium subscriber to $80 — compared to $88 in 2015 and $89 in 2016.”

But the investment bank said that advertising could lead to a higher revenue per non-premium subscriber than previously anticipated.



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