Global subscription economy to grow to $275 billion in 2022

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Global subscription economy to grow to $275 billion in 2022

The global market value for the subscription economy is set to grow to $275 billion in 2022, according to Juniper Research.

The recent study highlights the market forecasts for the subscription economy from now until 2026, indicating that the subscription market will rise by $51 billion this year, up from $224 billion in 2021.

The authors define a subscription service as, “A product or service that is bought or accessed via a recurring payment, and that requires no additional action to terminate beyond cancelling the recurring payment.”

The business model offers predictable revenue to businesses and widespread access to members.

The segments that offer subscriptions that are covered in the report include delivery services, digital fitness, digital music, digital spoken word, digital video, physical good, mobility-as-a-service, multiservice subscriptions and videos.

According to the analysis, the three areas that are set to generate the most global revenue this year are physical goods (45 per cent), digital video and digital music.

The increased demand for physical good subscriptions reflects global demand for reliable access to essentials including medicines, as the pandemic has seen supply chains disrupted and supermarket shelves wiped.

According to the whitepaper, “Physical goods subscriptions are arguably becoming one of the most successful subscription types with the biggest success in this area being for general product delivery rather than in specific categories only. Some of the key players in this area are Walmart and Amazon, with next-day delivery being an option for subscribers from both of these providers.”

Music, video streaming, spoken word and gaming is set to reflect 39 per cent of global subscription revenue in 2022. Key players include Spotify, Amazon Music, Apple Music, Deezer and Tidal in the music segment.

Digital video includes on demand as well as live streaming services. In some instances free content players such as YouTube and Pornhub rely on ad revenue and are unlikely to move to a subscription based model, whereas sports broadcasting services are competing with traditional broadcast TV for the rights to stream live games.

Varied payment methods are critical to the growth of the subscription service market, with many vendors supporting multiple methods, including open banking and digital wallets.

“Juniper Research recommends that platform providers should focus on the most popular alternative payment methods in their target countries, in order to minimise payment process friction, and so reducing churn,” the authors say.

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