Subscription POV
By Morten Suhr Hansen
The year 2022 was named ‘Annus Horribilis’ by many actors in and around the subscription movement. And it is true that the war in Ukraine, the supply crisis and the sky-high inflation challenged many subscription companies, because customers suddenly became more cautious and more critical in regard to committing to fixed monthly costs…
Many of the stories about the challenges of subscription businesses were focusing on few industries like the media and streaming companies and – to some extent – retail. Companies who are popular with consumers and therefore, is evident in the media landscape.
However, much suggests that the state of the subscription movement is more nuanced. Perhaps, 2022 wasn’t quite as bad as we thought and maybe, there is reason for a cautious optimism here at the start of 2023.
At Subscrybe, we see first-hand how ambitious subscription companies are
Jeg kan egentlig bare begynde fortællingen hos os selv. I Subscrybe har vi drevet rådgivnings- og konsulentvirksomhed indenfor abonnement siden 2011, og den måned, som vi lige er gået ud af, nemlig marts 2023, er den måned nogensinde, hvor vi har den højeste omsætning.
I can start the story with ourselves. In Subscrybe we’ve been running an advisory and consulting business within subscriptions since 2011 and we’re leaving March 2023 with the highest monthly revenue ever recorded.
I mention this to state the fact that we experience a very clear focus on subscription after the turn of the year, both from existing subscription companies who are ready to invest in developing their existing subscription business and from companies, who are not yet subscriptions companies, but have plans and strategies to evolve into one.
Let me show you an example from our projects. Earlier this year, we partnered with an existing subscription company to launch a whole new concept aimed at the private market: Subscription-based laptop consumption under the name ‘myway’, aimed at ambitious college students. We are also working with a large, Danish B2B company expand their concept to new, European markets. We’re also helping one of Denmark’s leading retailers with building the most ambitious subscription concept ever seen in the retail space. This is just to name a few, and underline the spread of subscription models and the amount of effort that large companies put into their subscription strategies.
The subscription economy grew by 12.1% in 2022
American Zuora, one of the world’s leading providers of system solutions for subscription companies has just released their yearly report on the state of the subscription economy internationally, known as ‘The Subscription Economy Index’ (SEI).
The index covers anonymized numbers from more than 500 of the companies who use Zuora’s platform. Among these, we find some of the world’s largest, global subscription companies, so even though the index is not covering the entire subscription space, the index acts as a strong sample.
In 2022, the companies in SEI saw an average growth of 12.1%. This is a lower growth than the one for the lifetime of the index (since 2012, companies in the index have grown on average 17% year-over-year), but it’s still significant growth and it is actually higher than the general S&P 500 index with which Zuora compares the subscription companies.
This correlates with the picture I tried to paint earlier. That certain, mostly consumer-faced industries have had a tough 2022. But it is definitely not true for all. At the same time, many subscription businesses within B2B is still enjoying strong growth.
Det svarer til dét billede, som jeg også prøvede at tegne indledningsvis. At visse, særligt forbrugerrettede brancher, har haft et hårdt 2022. Men det gælder bestemt ikke alle. Samtidig har mange abonnementsvirksomheder indenfor B2B stadig gode tider.
You can dive into the report here yourself, if you want to learn more about the subscription economy in 2022.
The subscription movement is standing tall, but…
A few weeks ago, I had the pleasure of attending the podcast ‘Subscription Talks’ where my colleague, Jonas Juul Jeppesen, is the host. In the newest episode we talk about where the subscription movement stands right now and what we can expect in the coming years.
Overall, it’s my clear conviction that the subscription movement is growing very strong. The subscription companies who can offer consumers and customers flexibility and convenience, and who can combine the core product with strong services will see growth and stability. But the competition is fierce and the expectations from consumers have become even bigger. Whether we’re private consumers or companies, we’ve become very skilled and critical subscription shoppers.
Some companies will take advantage of this, while others don’t stand out in the crowd. Surely, sheep will be separated from lions, while the overall growth continues.
