The rise of the subscription economy

The rise of the subscription economy

Millennials have been conditioned to expect and insist on immediate results. Therefore, the possibility to have instant access to a myriad of services for a low fee is hugely appealing to them. This trend, that started with music and video, extends now to many other segments of the economy (guitars or shavings kits being among the most original of the lot).

In terms of music, IFPI´s latest consumer insight report shows that, in 2017, 45% of fans were listening to music through a licensed audio streaming service. Spotify alone has 71 million premium subscribers.

Netflix already counts with 125 million subscribers and growing as, for a third consecutive year, the traditional TV and home video market will fall in the U.S. and it is expected to decline through at least 2022, as cheaper offerings from them (Netflix) but also from Amazon, Youtube or Hulu take their toll.

Subscription services are not new, what is disruptive is that they are no longer restricted to long-tail business models. Netflix, with a $8 billion planned investment in content for 2018, is increasingly producing movies that are released to subscribers the same day they go to theaters.

In videogames, subscription has been late to arrive but this trend is taking shape quickly. On January, Microsoft announced that their subscription-based Xbox Game Pass service would feature Xbox exclusives on the day they launched. Sea of Thieves and State of Decay 2 are already included and games like Forza Horizon 4 or Crackdown 3 will be incorporated at release day. Electronic Arts will also start a subscription offering this summer that gives early and full access to its latest PC games, such as Battlefield V and FIFA 19.

These innovative and thriving subscription models, together with streaming services, are definitely altering for good how people access and select their entertainment options.