Market & Competitive Analysis for PMs: Spotify Case Study

Spotify Case Study

Defining the Product

Photo by Thibault Penin on Unsplash

Spotify is a music streaming service that offers a free ad-supported tier and a premium tier without ads.

Spotify has a number of competitors, including Apple Music, Amazon Music, and Tidal.

Spotify has been able to maintain its market leadership by focusing on innovation and providing a great user experience.

Spotify is constantly adding new features, such as personalized playlists and social features.

Spotify also has a large library of music and exclusive content that is not available on other platforms.

Market Size of Music Streaming Market in India

Estimate the total market size for music streaming in India

This can be done using a top-down approach, such as estimating the total number of people in India with internet access and then multiplying that by a conversion rate.

For example, if there are 800 million people in India with internet access and we assume a conversion rate of 35%, then the total market size for music streaming would be 240 million people.

For easy calculation and matching future Active Users. Let’s consider this 250 Million People.

Estimate the average revenue per user (ARPU) for global players in India:

This can be done by looking at the pricing of global players in India and making some assumptions about how many users are subscribed to each tier.

For example, if Spotify charges ₹99 per month for its premium subscription and we assume that 50% of its users are subscribed to that tier, and other revenue comes from advertisement so then the ARPU for Spotify in India would be INR 60–70 per month.

Market Sizing with ARPU = INR 65/month

Market size = Number of active users * Average revenue per user (ARPU)

Using an ARPU of INR 65/month, the market size of music streaming in India is estimated to be around INR 16000 crore in 2023.

Market Sharing

Spotify’s market share in India is estimated to be around 31% in 2023. This means that Spotify has around 62 million active users in India.

To calculate Spotify’s revenue in India, we can use the following formula:

Revenue = Number of active users * ARPU

Using an ARPU of INR 65/month, Spotify’s revenue in India is estimated to be around INR 4,030 crore in 2023.

Market Sharing of Spotify and Competitors

The following table shows the market share of Spotify and its competitors in India in 2023, based on revenue with an ARPU of INR 65/month:

How to Find Competitors for any company?

There are two main categories of competitors:

• Direct competitors: These are companies that offer similar products or services to yours and target the same customer base. For example, Spotify’s direct competitors include Apple Music, Amazon Music, and Tidal.
• Indirect competitors: These are companies that offer different products or services but solve the same problem for the same customer base. For example, Spotify’s indirect competitors include radio stations and CD sales.

To find your direct competitors, you can simply look at the other companies that offer similar products or services. To find your indirect competitors, you need to think about the problems that your product or service solves. What other ways could customers solve those problems?

Types of Competitors

There are four main types of competitors:

• Direct competitors: These competitors offer similar products or services to yours and target the same customer base. For example, Spotify’s direct competitors include Apple Music, Amazon Music, and Tidal.
• Indirect competitors: These competitors offer different products or services but solve the same problem for the same customer base. For example, Spotify’s indirect competitors include radio stations and CD sales.
• Potential competitors: These competitors don’t currently offer products or services that compete with yours, but they could in the future. For example, a new music streaming service could be launched in the future.
• Substitute competitors: These competitors offer products or services that solve the same problem for the customer base, but in a different way. For example, a podcast app could be considered a substitute competitor for Spotify.

Understanding Your Competitors

The five criteria for understanding your competitors are:

• Product core: What are the core features and benefits of their product?
• Size of the user base: How many customers do they have?
• Design: How does their product look and feel?
• Brand: What is their brand reputation?
• Speed: How quickly are they innovating and releasing new features?

These criteria factors can be affected by a number of things, including funding, acquisitions, and new features/products.

Direct & Indirect of Spotify in India

Photo by Alexander Shatov on Unsplash

Direct Competitors of Spotify

Global:

• Apple Music
• Amazon Music
• YouTube Music
• Deezer
• Tidal

Local (India):

• Jio Saavn
• Gaana
• Wynk Music
• Hungama Music
• Amazon Prime Music (India)

Indirect Competitors of Spotify

Global:

• Pandora
• SiriusXM
• Peloton
• Apple One
• Amazon Prime

Local (India):

• Radio Mirchi
• Fever FM
• Red FM
• Big FM
• Radio City

Competitive Analysis Table of Spotify

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You can check-out my Myntra Case Study too:

Product Strategy Questions(CXOs): Approach and Myntra Case Study

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