Once you get past the whole Joe Rogan and Neil Young thing, Spotify (SPOT) had a great 2022.
So much so that the streaming giant has announced that executives now feel they can publicly state that it will have 1 billion users by 2030.
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That is quite an eye-popping claim, of course, as there is currently no streaming service, of any kind, that can claim it has one billion subscribers. Neither Netflix (NFLX) nor Disney (DIS) are putting up those kinds of numbers.
Spotify added 80 million listeners in 2022, up 20% from 2021, bringing it to a total of 489 million users worldwide. As services like Netflix and Disney+ have struggled with their user numbers last year, there’s been an idea circulating amongst analysts that the streaming sector may have hit a natural plateau of late, and to paraphrase a common idea, everyone who would be interested in signing up Netflix has done so by now.
But it would seem that Spotify is not sweating any talks of a streaming ceiling at all, as the company points to three factors that it believes will keep it on a growth trajectory for the rest of the decade.
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Ad-Supporters Tiers Add Listeners
Spotify’s discounted and free advertising-supported tiers have helped propel its massive growth over the years, bringing in 60 million ad-supported listeners last year, 37 million ad-supported listeners in 2021 and 46 million in 2020. In 2019, the company boasted it had a conversion rate of 46%.
It currently boasts 205 million premium subscribers worldwide, up from 180 million in the corresponding quarter of 2021.
Younger People, Global Audience Grows
Spotify has been expanding rapidly in recent years, and is now available in Russia, India and Latin America. 28% of its users were in its Rest of World region last year, according to NASDAQ. In fact, 47 million new users came from outside of the United States, including markets such as India and Indonesia.
Spotify has lately been aggressively targeting Generation Z, including incorporating video games like Heardle and social media features like Blend playlists and the ability to see what your friends are listening to in the app. It remains to be seen whether this bet will pay off.
Will young people, folks from emerging markets, and people who listen for free end up becoming loyal, paid subscribers? And will there be enough of them for Spotify to hit the one billion market? Or is the streaming ceiling lower than the industry would like? Spotify is keen on finding out.
