pple is joining Netflix, Amazon, Hulu, Now TV, and soon Disney in the increasingly saturated video content streaming market. With the subscription economy having grown by more than 100% each year over the past five years, it is little wonder why.
From coffee, to cars, to makeup and meals, consumers can now subscribe to just about anything. Some 65% of retail businesses now offer some kind of subscription programme, with a further 22% considering it in 2019 according to subscription services provider Ordergroove.
The boom of subscription economy has seen swathes of businesses adopt a recurring revenue model and 18% of all global payments ($41trn) are now recurring – either invoice, subscription or instalment payments,” Hiroki Takeuchi, CEO of GoCardless, a recurring payment provider, told Verdict.
The incentive to switch to the business model is improved cash flow. Rather than charging a one-off payment for a product or service when the purchase is made, businesses receive regular, recurring revenue injections. Businesses are able to predict income and avoid revenue dips that may concern investors.
Likewise, in our data-driven society, the subscription model provides businesses with a valuable advantage. According to Stephen Humphreys, General Manager at online learning company GoodHabitz, the model provides “useful insights into how the subscription is being used”, including the products and services that are more and less popular, which can then be used to refine the product further.
“Subscriptions allow you to access what you want when you need it and from wherever you are.”
According to Zuora, the proof is in the results. The company’s Subscription Economy Index shows that subscription businesses have grown revenues 5-9 times faster than traditional businesses over the past six years.
“All companies have at least two things: a product, and a customer base. Today the key imperative for all businesses is to tease out the service that sits within that product, in order to sell outcomes, as opposed to assets. Today all businesses are service businesses,”