NYT CEO outlines plans to reach 15 million subscribers by 2027
The New York Times on Monday said it's planning to reach 15 million subscribers by the end of 2027, a goal that CEO Meredith Kopit Levien told Axios will help the company become even more profitable in the next three to five years.
Why it matters: While 15 million is a small fraction of the 135 million people globally that the Times believes are willing to pay for a news subscription today, it's a massive number compared to its peers' subscriber rosters.
The big picture: The new goal marks a significant milestone in the Times' long-term business transformation.
- Now that the company has reached a critical mass of over 9 million subscribers, its next phase of growth is expanding the business opportunities around those paid users.
Details: In a three-hour presentation, executives articulated their strategy to make The Times' subscription offerings more engaging and more profitable.
- The company is experimenting with new products to help cross-promote its current standalone subscription offerings across news, cooking, games, consumer reviews and sports to push subscribers to purchase bundles.
- For example, it's testing a new Games tab called “Play” in its News app to get more news subscribers to engage with, and later subscribe to, games.
- "Multiproduct subscribers pay the most and retain best," chief product officer Alex Hardiman noted during the presentation. Bundle subscribers churn at rates approximately 40% lower than news-only subscribers, she explained.
Executives also offered new details about how the Times plans to expand the business of the Athletic, the digital sports publisher it acquired in January for $550 million.
- The Times plans to add the Athletic to its subscription bundle at no extra charge, while also allowing nonsubscribers to sample some free content before they decide to pay.
- The Athletic's publisher, David Perpich, said the company estimates there are roughly 24 million people in the U.S. alone who are willing to pay for sports journalism.
- The Times' ambitious subscription growth goal "includes an assumption about scaling The Athletic" as a standalone business, Kopit Levien said.
Be smart: A focus on profit will help maintain investor optimism as markets continue to falter.
- The Times' stock has fallen 40% year-to-date, erasing all of its pandemic-era gains.
- Investors have grown especially wary of consumer subscription businesses in the streaming space that quickly scaled users at the expense of growing profits.
Between the lines: The Times continues to invest heavily in the subscription model because it has "very attractive unit economics," Kopit Levien told Axios.
- The cost of serving a new subscription is so low that even when people pay very little for it, profit margins are high, she said.
- Because the company has invested so much in cross-promoting its subscription products to the 100 million+ monthly users who visit the Times for free, it doesn't need to spend heavily on user acquisition.
- As a result, the company expects its marketing to decline in the midterm future, which will improve profits. The Times said it plans to improve its adjusted operating profit margin growth rate by 9–12% in the next three to five years.
- The Times hasn't disclosed what its current average revenue per subscriber is, but executives said product improvements will increase how much money it can make per subscriber over time.
What's next: Asked if the Times was eyeing other subscription offerings, Kopit Levien said sports was "a clear missing piece" in its bundle offering, but "we don't feel like there's a gaping hole in the portfolio at this point."
- "I would say right now, we're incredibly focused on the connectivity of the products we have," she said.
- The company is still experimenting with a subscription offering for kids. Kopit Levien declined to offer further details on that product's status.
The bottom line: Asked about further acquisitions, Kopit Levien said, "I would never rule anything out, but what I will say is our plate is pretty full right now in terms of the value we have to offer."