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.