Jun 01, 2017

Subscription services providing better cash flow?

Subscription services are increasing in popularity. The combined number of Spotify and Netflix subscribers is around 140 million users. Millennials prefer to pay a simple contribution for access to a service rather than own something. The reasoning behind this could be because of constant technological advancement, but also because ownership is long-term, slower and expensive.

 

 

Convenience, cash flow & user satisfaction

The subscription business model is also more convenient for organisations’ incoming cash flow. Through a monthly subscription, businesses can receive regular, reliable and recurring revenue in exchange for their services and/or product.

Google confirms this sentiment with its recent launch of a new subscription dashboard within the Play Console for app owners and developers. Google claims that subscriptions are a win-win for both developers and users because they have seen a “10X growth in consumer spend over the past three years”, along with a double increase in active subscribers in the past year.

The tech giant also comments that this business model is a “big opportunity” to make money and bring in regular income. Interestingly, Google’s statistics show that users usually are not sufficiently worried about the price to shy away from such a service, with 64% of their users budgeting “on a per app basis”.

The choice is only increasing

You can find a subscription service for anything you can think of nowadays. Start-ups are innovating and delivering bespoke products that the consumer actually needs. The Farmer’s Dog, for instance, offers its customers a customised pet food subscription service with tailored fresh food. The American start-up raised $10.1 million since it was founded in 2015.

This business model is not the sole domain of subscription-only companies. It has been revealed recently that Twitter is considering offering an added-value premium area for its social network through a paid subscription service. Microsoft also has announced that it is launching a new monthly game subscription for its Xbox One console. In other news, the online retail giant, Amazon, has added live and on-demand TV to its wide array of subscription services.

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