The world leader in the subscription economy is the United States. 53% of all digital subscriptions on the planet are consumed by residents of this country. The average American subscribes to 12 services and in 2023 spent $273 on them per month. Millennials lead the “subscription” ranking by a wide margin, as each of them subscribes to an average of 17 different services.
Yes, the most common services are various platforms that deliver media content. For example, the already mentioned Youtube Premium and Netflix, but not only. Spotify, Disney+, Apple TV, Amazon Prime Video… The list goes on. According to the same statistics, 98% of Americans who are subscribed to at least one service have a subscription to one of the mentioned platforms. 75% have two subscriptions at once. According to estimates, this year this entire crazy army of consumers will transfer almost 300 billion dollars to the platforms.
Tip of the iceberg
Don’t think that the subscription economy is limited to watching TV shows. Businesses around the world are struggling every day to get in on the fast-growing trend. How fast? According to Zuora (the company that runs and calculates the Zuora Subscription Economy Index, an index that tracks subscription economy companies), subscription economy businesses have grown 4.6 times faster than the S&P500 over the past decade.
Such dynamics cannot be ignored. Startups and multinational giants are all thinking about how to motivate their customers to subscribe to monthly payments. Amazon offers free two-day shipping to those who subscribe to the Prime service. Our Rozetka offered a similar service before the war. Adobe offers the world-famous Photoshop and Illustrator on a SaaS model, that is, for a monthly subscription fee. NV.ua and thousands of well-known publications around the world offer news subscriptions, and millions of bloggers call for donations via Patreon.
The inhabitants of our planet subscribe to cooking recipes, medicine delivery, training courses, PlayStation games, and even razors.
This is convenient not only for consumers, but also for businesses. It doesn’t matter whether the client uses the purchased service or not. He still paid for it. And he will continue to pay until one day he decides to check how much money he spends on various subscriptions. But such checks don’t come up often. The statistics speak for themselves: 89% of subscribers underestimate the amount they spend on subscription services.
Good or bad?
It seems as if cunning businessmen prefer to fool the average customer, imposing on him what he does not need. But this is a very erroneous idea. The whole concept of the subscription economy is built on the thesis that the proposed service should solve the urgent need of the customer. To close the so-called “pain point”.
The startup Dollar Shave Club has found a solution in shaving. Every day, hundreds of thousands of men remember while shaving that they should have bought a new blade or lotion last week. And when they get home, they forget to buy them again. The startup has closed this gap by offering a subscription for razors, blades, and care products. $9 per month - and a courier will deliver everything you need right to your home at a specified time. Isn't it convenient?
Similarly, any other subscription service solves a specific problem. Whether it's fast delivery from an online store or a new episode of your favorite TV series at your fingertips, it doesn't matter. The subscription economy would die before it was born if no one needed it.
Banks are catching up
There are subscription services in the financial market as well. Although it should be admitted that their distribution is extremely weak. And in Ukraine this model is almost not used at all. Whether due to the low level of financial literacy, or for some other reasons, Ukrainians prefer to get everything for free, avoiding any monthly payments.
Although, in fact, the subscription model is potentially very well integrated into modern banking. But are Ukrainians willing to pay the bank a nominal 99.99 UAH per month for a card and a package of free services to it? Which would include, for example, transfers to any cards or accounts without a commission, utilities without a commission, a reduced rate on the credit limit, increased cashback in partner networks, additional interest on the deposit, additional services such as home accounting, priority access to support. The list of possible financial services can be continued. Provided that such services are actively used, a moderate subscription fee for a package solution would ultimately be a more profitable strategy than payments for each service separately.
I think that the general trend of the subscription economy will sooner or later become part of the banking sector. And not only banks, but also ordinary Ukrainians should prepare for it. I am sure it will be interesting.
The following sources were used in preparing the material: UBS, West Monroe, Statista, Brightback..
