it's become one tough six months For Sonos. Following the disastrous roll out of its new control app, the multi-room giant has spent quite a bit of time over the last few months on a reputation-saving mission – saying sorry (a little late), discontinuing products (briefly, at least). , and investing money in an app fix that still isn't completely finished.
A few weeks ago he announced Earnings for fiscal year 2024And they were – perhaps predictably – not very pretty. Total revenues were down 8 percent year-on-year (YoY), with Q4 being particularly bad, down 16 percent YoY. Sonos previously tried to minimize the impact of its mistakes by blaming “soft demand due to challenging market conditions”, while acknowledging that “challenges posed by our recent app rollout” had also played a role.
However, that may be true—there may be bigger things at play here. This is the second year in a row that Sonos has reported a year-over-year decline in revenue – despite two rounds, a decline of 5.5 percent in 2023 retrenchmentCEO Patrick Spence used the word “challenging” to describe that year, too, and while it was never going to be easy to maintain momentum after two bumper years during Covid, some patterns may be emerging. .
In its FY24 earnings callIt was also commented by investors that Sonos has only added one million new users this year – this may sound impressive but it was said to be the lowest in the last “5 to 10 years”. And while total speakers per home were actually up from 3.05 to 3.08 last year, with a slowing new user base, how can Sonos continue to make money in search of a saturated market?
in good company
Sonos wouldn't be the first company to consider whether a subscription model could help keep things better. Recurring revenue streams make a lot of financial sense – and some big brands use them to their advantage for just that reason.
go pro First encountered a subscription model poor sales in 2016Offering cloud storage for footage at its cost action camIt further expanded its GoPro Plus offering in 2018, and has continued to do so, growing the customer base from 160,000 members at that time to 2.56 million. November 2024While overall revenue declined year-over-year in the third quarter of 2024, and layoffs were occurring as a result, its customer revenue grew 11 percent, showing that the model holds promise when hardware sales falter. Is.
Games console manufacturers have also found subscriptions extremely beneficial to their profits. In 2021, during the Activision Blizzard acquisition, legal documents revealed that Xbox's Game Pass was brought total $2.9 billion From consoles—about 18 percent of total Xbox business in the fiscal year ending 2021. Next year it could reach $4 billion, it has happened predictedSo on with the Xbox sales plummeting Earlier this year, it probably comes as no surprise that the company responded Game Pass price increase Up to 25 percent in the same month.