The following is a reflection of how I currently perceive the mood in the WordPress (plugin) industry.
It might change. I might be wrong. But I wanted to keep my thoughts written down somewhere.
In one or two years, I might look back and see which parts I got right.
2020 was a great ride for plugin developers. COVID kept people home and forced businesses to invest in their web presence.
WordPress’ market share – already on a high level – increased significantly. The tide raised all boats.
In mid-2021, the tide is gone. The growth of WordPress plugin businesses stagnates or is even declining.
If 2020 never happened, we would still be happy, since business in 2021 is better than in 2019. But 2020 did happen and let us dream bigger.
Some of us took the new level for granted. We invested. We got accustomed to the new numbers.
Thanks to subscriptions, numbers are still good. Even better than in 2020. Staff and running costs can be paid.
Or maybe, we, now meaning our Advanced Ads business, got lucky there. Others openly reported their decline in revenue.
A lot of my plugin-selling peers confirmed in confidence that revenue is going down. At least, revenue from new customers.
There were a lot of acquisitions before COVID already. I have been approached by potential buyers and investors almost since the beginning in 2014, though it became more in the last years.
Acquisitions will continue
The lack of expected – or hoped-for – growth is putting pressure on independent plugin developers and small companies. In the end, this is what we are living for.
Lack of growth is one thing that could be handled. It is more of a mental challenge for the founders.
Lack of money to pay your motivated team is another, more real thread.
While solo founders often sell (growing) businesses because they find the company-building part challenging, we might now see more mature businesses to sell for the sake of lifting the (financial) burden from their shoulders.
So I look forward to not being responsible for finance and that part of running a business and leave that to the much more capable people …https://joost.blog/yoast-joins-newfold/
Selling is one solution. But it isn’t applicable for many. There are too many niches, too many competing plugins.
Declining sales numbers also lower the expected purchase price significantly.
Consolidation by mergers
What I haven’t seen, yet, are consolidations in form of mergers between companies and products.
The process could include one business owner selling to another for a discounted price, or two teams building a new company.
This doesn’t necessarily mean closing down one popular product in favor of another. One company with multiple products in a given space could cater to different user groups while increasing its domain expertise.
Just giving up
I expect that some solo founders might sell for an apple, just to get rid of the mental burden. Maybe, some will even just go out of business, when no potential buyer is in sight.
Many years ago, I have been in a situation, where another business idea failed. I was lucky to not having staff on payroll then, but still, remember that I fought to save the time I invested and proof that my business (idea) was still valid. If you are an entrepreneur, read up on sunk costs, learn to accept it, and move on.
Increased marketing and less flexibility
Small and big companies might try a few things to stop revenue from decreasing.
Depending on their profit and decline, measures might be more or less extreme. Something like
- stricter refund policies, especially for automatic renewals
- larger discounts for new customers in connection with the above
- investing heavier in new marketing channels – e.g., Google Ads
- subscriptions – if they didn’t have them before
With everyone doing the above, we might see tactics that we wouldn’t have dared to try before. We will know what this means when we see it.
I expect more SaaS solutions to come up to keep users paying. I especially mean SaaS services that are doing what a plugin included in the distributed code.
Currently, such features keep working even if the customer does not renew their license.
That wasn’t a thing before COVID. The rise in SaaS-based plugins might just coincide accidentally. The introduction of automatic renewals for WordPress plugins didn’t need a crisis. It was just the WordPress business space evolving.
Still, I believe that financial pressure will speed up this trend.
There is already subscription fatigue among WordPress publishers. There will be SaaS fatigue as well.
The new normal
It is my job as a founder and CEO to be aware of changes and think about how they affect our company.
We are still in a very good position. I also believe that we haven’t reached our full market potential.
I have always looked at growth in business as the opposite of decline. As long as the business grows, it is not declining and there are fewer chances for having to make hard decisions.
I would be totally content if you could guarantee me that business will stay at the current level and neither grow nor decline. But you can’t, could you?
What if the usage of WordPress wouldn’t grow anymore? That might put a cap on the market.
I – and other business owners – should think about this possibility and learn to adapt to it.
Mergers and acquisitions are one way to grow a company in this space. Branching out into other markets is another.
Or we learn to be content with what we have and sail through smaller ups and downs.
I will look back at this reflection in two years. Let’s see where we are then.