The Ups and Downs of Subscriptions

Subscription models are one of the fast growing models for services in the U.S today. They’re growing over three times as fast as any S&P 500 company. Most people today have at least on subscription, and many average over three. Why is this happening though? What’s the appeal, and are subscriptions here to stay?

Subscriptions are a model built on the central principle of convenience. Imagine a newspaper subscription for example, these have been around for decades, but what do they offer? They get the newspaper to the consumer’s house regularly, without any input from the consumer. For anyone who regularly wants the paper, it’s a no brainer really.

What’s happening today is this principle is expanding into countless unexplored territories. The pioneer of modern subscriptions was streaming services. These were so practical and so cheap that they quickly overtook all other alternatives. Why go to the movies or watch cable when Netflix is available right at home. 

Quickly people have realized that this doesn’t need to apply just to streaming services. Gaming is one market that has recently been dipping into subscription services. Why own a game when one can have a library of many for far cheaper? What subscriptions ultimately rely on, for the consumer, is being used. If the consumer isn’t using them then they’re not really saving any money.

Yet even this has become less important with time. Sure for classic subscriptions like a Costco membership, one really must use it constantly. Yet many modern subscriptions are based on being interesting, surprising, and fun. For example there are now countless themed boxes that one can subscribe to. These offer new diverse products every month. Are they worth the cost, no, but that’s not the point anymore.

On the other side of the spectrum is convenience above all else. Now people are getting products that are readily available delivered to them through subscription services. For these think Instacart or even Amazon Prime. They may save money, but only when utilizing the services fairly consistently.

All of these factors put subscriptions into a unique little box. They can save people money, but typically only through extensive use. Even worse subscriptions tend to lower in quality and rise in cost. Look at streaming services today, for example. As the market diversified each individual streaming service became less valuable to the consumer. 

What does this mean for subscriptions moving forward? It’s hard to say. The reasons people use subscriptions are diverse. Some focus on the potential to save money, some the convenience, some the intrigue and fun. Younger generations are using subscription services now more than ever, clearly, they’re not going anywhere.

Yet that doesn’t mean they’re going to remain the same either. The big question for any streaming service is how to be profitable. For some, like many streaming companies, they’re simply not. And relying on building a big enough base to add more payment strategies later has not always worked out. On their own subscriptions are neither a good or bad thing, but they present a dangerous amount of potential. Now time will tell how it’s utilized.

Data shows subscriptions are here to stay

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