Hard times for the technology and consumer industries have created a lot of buzz around “subscription fatigue”. The very model commercial and consumer platforms have relied on to ensure their growth and predictable revenue looks under threat in a changing economy.
There is a problem with this idea, however: it is not true. Subscriptions don’t die; they just evolve.
Smart enterprises are iterating on the subscription model with variations such as usage-based billing. Here’s what we’ve learned from supporting over 4,500 subscription businesses with subscription billing and revenue management as they respond to changing times.
A brief history of subscriptions
The current generation of subscription models has seen strong growth since the rise of Salesforce in the mid-2000s and changes from large companies like Adobe and Microsoft standardized them in B2B.
If you’re already offering a subscription-based model and you’re seeing subscribers dropping off, making assumptions about why they’re doing it is a recipe for failure.
In B2C, company after company aspired to replicate the success of Netflix. A long-proven model that looked like a relic from the world of newspapers and “book of the month” clubs dating back to the 1600s has become the hottest trend in technology and e-commerce. Additionally, the digital infrastructure has provided a wide range of opportunities for innovation.
But in 2022, the conversation has changed. When Netflix announced that it had lost 200,000 subscribers in the first quarter of 2022 and expected to lose 2 million more in the coming months, a new narrative was born in both B2B and B2C. Many industry commentators saw it as a signal of a much deeper shift, where customers were cutting back on spending and moving away from subscriptions as a category.
what’s really going on
The facts tell a very different story, however. Netflix’s second quarter reports included a loss of one million subscribers. His results suggest that “subscription fatigue” is not what it seems. Additionally, new businesses are still built entirely around subscriptions and traditional businesses are still embracing subscription offerings at a staggering rate.