Many say that consumers are increasingly turning their backs on subscriptions. The problem with that statement is that it’s simply not true!

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Af Morten Suhr Hansen

Unfortunately, I hear it all too often these days. People believing that the golden age of subscriptions is coming to an end. That it’s become harder to run a subscription business. That consumers are increasingly turning their backs on subscriptions, that they’ve grown tired of them.

The problem with those statements is simply that they’re not true!

When I look across the business landscape, both in Denmark and the rest of the world, I see many examples of large, successful subscription companies reaching new heights in these months. It seems like the subscription movement is rolling like never before. Let me provide some examples of that, but first, it might be worth delving into why some still believe that subscriptions have become more difficult.

Subscription-based e-commerce increased in 2023

Just over two years ago, Russia entered Ukraine. In itself a tragic event, but it also sparked a private economic crisis with rising inflation and low consumer confidence. This caused many consumers to pause for a while and stop swiping their credit cards. It also meant a lower influx of new subscribers for many subscription businesses. At the same time, there was a bit of a trend in scrutinizing bank statements and canceling subscriptions and other fixed agreements that no longer made sense. In other words, it set off a cleanup.

It has certainly meant that many subscription businesses woke up to a new reality. An experience of tougher times. This may have been even more noticeable because the years leading up to, during, and after the coronavirus pandemic had been particularly favorable for many subscription companies.

But was the new reality actually as harsh as it seemed? According to the latest figures from Dansk Erhverv in 2023, total e-commerce in Denmark fell by 8%. However, subscription-based e-commerce increased by 2% during the same period.

So even if 2022 was a tough year for subscriptions, it seems that it turned into a positive trend in 2023. This is also the experience I have from our customers here at Subscrybe.

The best start to the year in many years

Last Friday, we had the pleasure of hosting over 100 guests at Subscrybe’s office in Copenhagen during a large event focusing on the subscription movement and its opportunities. At the center was Nordisk Films Biografer, which in November 2023 launched Bioplus Unlimited, an ‘all-you-can-see’ subscription where, for 229 Danish kroner per month, you can go to the movies as much as you like.

This adds Nordisk Film to a long list of major Danish companies that have successfully launched new subscription concepts in recent years: Matas, Synoptik, Aarstiderne, Rekom, and F.C. Copenhagen, just to name a few.

The event is one of the largest and most well-attended we’ve had in many years, and at the same time Subscrybe has had the best start to the year ever in 2024. Once again, it’s an important proof that the subscription movement may never have been stronger than it is right now.

International growth in the subscription market

Internationally, looking at some of the world’s largest companies, a similar picture emerges. Let’s start with Apple, the world’s second-largest company by market capitalization. Subscriptions account for an increasing portion of Apple’s revenue. In 2023, 19% of Apple’s revenue came from their own subscription services like Apple TV+, iCloud, and Apple Music, totaling USD 85 billion. On top of that comes Apple’s earnings from others’ subscriptions sold through the App Store.

Similarly, other companies on the list of the world’s largest, such as Microsoft, Amazon, Google, Meta, and Nvidia, all utilize subscription models in one way or another.

The stock markets have also taken notice of subscriptions. In recent months, Netflix’s stock has risen by 42%, Spotify by 78%, Amazon by 31%, and Salesforce by 42%. In comparison, the general index, Dow Jones, has risen by 12%.

What does this mean for your subscription business?

Does all of this mean that just being in subscription guarantees success? Definitely not. As my examples show, giants both in Denmark and internationally have truly embraced subscriptions. This has led to a significant professionalization of running a subscription business. And competition is intensifying.

So maybe we’re coming back to the beginning: That many find subscriptions challenging. Because the opportunities for consumers are vast and almost overwhelming. So if the value proposition for consumers isn’t razor-sharp, and if all processes aren’t spot-on, they’ll quickly find other alternatives.

P.S. All of the above examples are from the business-to-consumer market. This increases relevance for the many. But my assertion is that the development might be even wilder in the business-to-business market. I’ll come back to that at a later date.