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Throughout the last ten years, subscription models have witnessed tremendous growth. Currently, countless individuals worldwide subscribe to numerous products and services spanning all industry sectors.
Virtually every business now offers subscription options, with some of the most recognized subscription services including Netflix, Amazon Prime, and Udemy Business.
The increasing consumer interest is expected to drive the subscription economy’s value to $1.5 trillion by 2025.
For those curious about this ecosystem’s remarkable expansion, consumer patterns and preferences, and successful business strategies, these 30 subscription economy statistics provide essential insights worth exploring.
The subscription economy ranks among the most rapidly expanding business sectors. By 2020, countless subscribers were already supporting numerous enterprises that collectively built an industry valued at $650 billion.
Consumers increasingly embrace subscription-based purchasing models, establishing this as a dominant market pattern. Remarkably, during the past nine years, the subscription economy has expanded by 435%, and experts project it will develop into a $1.5 trillion marketplace by 2025.
Driving this subscription market expansion is a dual phenomenon of consumers desiring more recurring service options alongside businesses developing subscription packages to enhance their commercial growth.
Nearly all companies have begun implementing subscription offerings because of the reliable and foreseeable revenue streams they generate. Indeed, the subscription business model’s expansion largely stems from this stability which enables companies to scale operations, develop further, and appear more valuable to potential investors.
When customers become subscribers, they receive numerous advantages including accessibility, personalization, and financial savings. Services for streaming content, delivery operations, and transportation networks exemplify the kinds of enterprises delivering these advantages.
A digital subscription encompasses any product or service delivered through Internet connectivity. Common illustrations include streaming platforms like Netflix and learning services such as MasterClass.
Presently, the aggregate market capitalization across all digital subscription businesses amounts to $14 trillion.
Streaming services fall within the media and communication services category, constituting 34% of the entire digital subscription landscape. Additional industries within this vertical include 5G networks, WiFi providers, and music streaming platforms.
Subscription enterprises have significantly outperformed conventional businesses in growth trajectories. The Zuora Subscription Economy Index reveals that subscription-based companies have expanded 4.6 times more rapidly throughout the past decade when measured against the S&P 500.
Why does this comparison matter? Because the S&P 500 represents a stock index comprising the 500 largest public corporations in the United States, many established decades ago and operating within traditional industry frameworks.
A potential catalyst for future expansion among traditional enterprises may involve integrating membership and subscription frameworks into their business strategies.
For instance, research conducted by Manifesto Growth Architects indicates that 70% of businesses were exploring ways to incorporate these revenue-generating approaches.
The United States dominates with 53% of all digital subscription consumption, substantially exceeding any other country. Despite comparable population figures, European consumers collectively account for merely 21% of all digital subscriptions, less than half the American market share.
Many leading digital subscription enterprises—including Netflix, Disney+, Uber, Amazon Web Services, and Adobe—originated in the United States, which contributes significantly to this market disparity.
The expansion of the subscription marketplace has triggered an upward trend in consumer expenditure on subscription-based services.
For instance, between 2018 and 2021, the typical American consumer increased their recurring purchase spending by $430 annually, representing a 15% rise.
Currently, consumers spend an average of $273 monthly on subscriptions, and this amount encompasses common recurring expenses such as mobile phone services and internet access.
The proliferation of subscription services has resulted in consumers struggling to monitor their expenditures accurately. According to West Monroe research, a remarkable 89% of consumers undervalue their actual spending on subscription services.
More specifically, 66% of consumers underestimated their monthly subscription expenses by over $200, while 13% underestimated by more than $400.
Dormant subscriptions present another challenge for consumers, with 42% acknowledging they have forgotten about a subscription yet continue paying recurring charges.
The most commonly overlooked subscription categories include mobile phone services (31%), Internet access (30%), TV/movie streaming platforms (22%), and Amazon Prime memberships (16%).
Across different age groups, Generation Z (55%) demonstrated the highest likelihood of forgetting about subscriptions, with Millennials (48%) and Generation X (43%) following behind.
Numerous other investigations reveal comparable findings. One analysis indicates that 30% of monthly subscriptions remain unused, while another examination discovered that British consumers waste an extraordinary £25 billion annually on unwanted and inactive subscriptions.
A recent Statista examination of entertainment and media subscription patterns revealed that typical American consumers maintain 12 paid subscriptions.
When analyzing subscription quantities by generation, Millennials dominate with 17 subscriptions per person, while the Mature demographic maintains the fewest subscriptions, averaging just seven per individual.
The actual count of paid subscriptions likely exceeds these figures considerably, as this research exclusively examines one market segment.
Nevertheless, Millennials don’t solely dominate entertainment and media subscriptions. They also represent the largest demographic in retail subscriptions at 39%, while Baby Boomers and Seniors occupy the opposite end of the spectrum with merely 16%.
Video streaming subscription platforms represent the most widely adopted subscription model, with 98% of consumers enrolled in at least one service and 75% participating in two or more.
The most prominent streaming platforms include Netflix, Hulu, and Disney+, each delivering content catering to diverse age groups and viewer preferences.
Additional popular subscription categories embraced by consumers include mobile applications (53%), news services (39%), and curated box deliveries (37%).
Recurly’s State of Subscriptions Report 2023 reveals that streaming video holds the top position among subscription categories, with an impressive 56% of all new subscription acquisitions occurring in this segment during the previous 12-month period. Following behind are streaming audio platforms (29%) and gaming services (22%) as the next most popular categories for initiating new subscriptions.
This trend aligns with expectations, considering entertainment’s perpetual demand, and streaming platforms provide a user-friendly and cost-effective method to access extensive content libraries.
| Subscription Category | Percentage |
|---|---|
| Streaming Video | 56% |
| Streaming Audio | 29% |
| Gaming | 22% |
| Health & Fitness | 20% |
| Food & Beverage | 15% |
| In-Person Entertainment | 12% |
| Software | 11% |
| Consumer Goods & Retail | 11% |
Top subscription categories (Source: Recurly)
The remarkable surge in OTT TV and video subscribers continues unabated, with industry projections estimating growth to reach 2 billion subscribers by 2025.
For context, by late 2023, Netflix, the industry-leading OTT subscription provider, had expanded to exceed 260 million subscribers across 190 countries worldwide.
Three key developments will drive this expansion: established media companies transitioning to online platforms, numerous businesses integrating subscription models into their operations, and 5G technology enabling mobile streaming capabilities.
Furthermore, conventional broadcasters will face intensified competition from Netflix, Disney+, and Amazon Prime for viewer engagement.
Statista research indicates that Amazon Prime Video leads as the most popular subscription video-on-demand (SVOD) service by market share in the United States. The platform commands a 21% market share, compared with Netflix (20%) and Max (15%).
These figures derive from user engagement metrics based on content added to viewing watchlists.
Nevertheless, when measuring strictly by subscription numbers, Netflix maintains leadership with 80.13 million paying subscribers reported throughout the United States and Canada.
Throughout the COVID-19 pandemic, eCommerce enterprises experienced unprecedented product demand, propelling the eCommerce subscription sector to a $72.91 billion valuation in 2021.
Notably, demand indicators show no deceleration. The sector continues growing at approximately 65% annually with projections to achieve a market valuation of $904.28 billion by 2026.
An additional report comparing different subscription service categories between 2022 and 2023 discovered that Beauty & Personal Care experienced a 21% increase in average order value (AOV), while Food & Beverage observed an 11% AOV increase.
Subscription boxes have emerged as a favored option for recurring eCommerce purchases. These offerings span numerous categories, including apparel, cosmetics, pet supplies, infant nutrition, and fitness equipment.
Currently, the subscription box industry represents a $32.9 billion market and analysts project expansion to $105.4 billion by 2032.
Among the leading subscription box providers stands HelloFresh, delivering meal kits complete with recipes and ingredients. Despite experiencing a reduction in active subscribers during 2023 (7.07 million) compared to the previous year (8.5 million), HelloFresh maintains a robust presence in the marketplace.
SaaS (Software as a Service), commonly referred to as on-demand software, operates by providing software access to subscribers through licensing arrangements.
Currently, this sector encompasses thousands of businesses and commands an estimated value of $197 billion, with experts forecasting growth to $232 billion by the conclusion of 2025. Well-known SaaS enterprises include DropBox, Slack, HubSpot, and Salesforce.
Established in 2008, Dropbox functions as a cloud services provider allowing users to store and manage files on their servers for a monthly subscription. The company has expanded to encompass over 700 million registered users and 18.04 million paying customers, generating reported earnings of $622.5 million for Dropbox in 2023.
An emerging development within the creator economy involves integrating subscription and membership options into various platforms. Several leading platforms now host millions of subscribers supporting a diverse community of creators.
Patreon and Substack represent prominent examples of creator platforms built on subscription models.
These services enable followers to subscribe to content creators and receive exclusive materials in exchange. Such premium content encompasses newsletters, imagery, video productions, and interactive Q&A sessions.
Numerous venture capital firms have invested substantially in these companies to facilitate the swift user expansion on subscription-centered platforms.
For instance, during 2021, Patreon secured over $155 million, while Substack raised $90.2 million across five funding rounds to enhance their service offerings.
Patreon stands as a premier subscription platform that facilitates connections between creators and their audiences. Through this service, users can financially support their preferred creators via monthly payments in exchange for accessing exclusive content.
Content creators on Patreon generated $1.5 billion through the platform’s subscription mechanism in 2021, while Patreon accumulated a total investment of $412 million throughout its operational timeline, spanning from 2013 to 2021.
Currently, the top-earning creator is the yard, with 32,834 paying patrons and an estimated monthly payout of $214,797. However, the most popular Patreon show by the number of patrons is Matt and Shane’s Secret Podcast, with over 80K subscribers.
Udemy is an online course platform through which creators can host and sell courses. The company monetizes courses through two methods: one-off purchases and subscription access for businesses.
Udemy Business has been growing quickly, and in 2023, the annual recurring revenue (ARR) increased to $443.1 million.
Online learning platforms are increasingly moving away from one-time payments over to subscription models of monetization. One example of a platform that has made this transition is MasterClass, which has over 1 million paid subscribers.
Subscription-based memberships are gaining in popularity even for independent knowledge creators. For instance, Thinkific, a popular course creation platform, found that 36% of edupreneurs planned to create a membership site in 2022.
Kajabi, another renowned membership platform, documented an increase in memberships purchased through their system from 1.4 million in 2021 to 1.7 million in 2023.
Membership sites deliver numerous advantages to content creators. From a financial perspective, perhaps the most significant benefit is providing a more consistent revenue stream. For subscribers, membership perks include enhanced learning opportunities, diverse content consumption options, and improved access to course instructors.
Subscription-based businesses employ various promotional strategies for their products & services, with free trials standing out as particularly effective.
An AMIC media analysis reveals that free trials maintained 61.7% of consumers from initial to second month. The same study indicated that paid trials retained an impressive 82.1% of users, representing an even higher retention rate.
While paid trial retention figures might appear more compelling, these statistics don’t account for the conversion percentage of website visitors to trial participants.
Therefore, subscription companies must experiment with different promotional offers and thoroughly evaluate what performs optimally within their specific industry segment.
An additional widely-implemented approach to subscription marketing involves the freemium model, offering a restricted free subscription alongside a comprehensive premium option.
Slack, the well-known communication platform, operates using a freemium structure, providing users access to perpetual free accounts.
According to industry reports, 30% of Slack users upgrade their free accounts to paid subscriptions. This strategic offering helped catapult the company to exceeding 10 million active users.
Numerous companies invest substantial resources acquiring new customers through paid advertising, making it crucial to maintain subscribers for extended periods to recover expenses and generate profits.
In fact, recent research by Investpcro demonstrates that acquiring a new customer costs five times more than retaining a current one.
Furthermore, Investpcro discovered that after becoming subscribers, customers’ likelihood of purchasing additional products or services increases to 60-70%, substantially enhancing the customer’s lifetime value.
Churn rate represents the metric quantifying how many existing customers discontinue their subscriptions. It stands as one of the most critical measurements when evaluating subscription business performance.
For membership organizations to experience growth, their churn rate must remain below their customer acquisition rate.
Recurly research indicates the average churn rate across the subscription industry measures 4.1%, with
Digital Media & Entertainment experiencing the highest vertical-specific churn rate at 6.9%.
Software maintains the lowest churn rate among all verticals at merely 3.5%. As many SaaS companies market their services to other businesses (B2B), they benefit from this comparatively low churn rate.
Dollar Shave Club operates as a direct-to-consumer brand specializing in men’s grooming essentials. During 2020, the company experienced a significant sales surge attributed to pandemic-related trends of quarantine beards and home haircuts.
The enterprise has successfully maintained a majority of these new customers through distinctive product offerings and their streamlined delivery approach.
Moreover, they defied industry norms regarding low quarterly retention metrics by achieving an industry-leading rate of 54%, according to Second Measure reporting.
Involuntary churn occurs when users unintentionally terminate their subscriptions from a service provider. The predominant factors causing involuntary churn include payment failures, card expirations, and credit card decline incidents.
Companies face potential monthly subscriber losses of approximately 1% due to involuntary churn mechanisms. The proportion of users vulnerable to such losses varies across industries, ranging from a minimal 0.8% within SaaS subscriptions to as high as 2.5% in Media & Entertainment subscription categories.
Organizations can minimize involuntary churn through implementing robust decline management techniques, including automated payment retry systems and delivering timely notifications prompting customers to update their payment details.
Regarding subscription payment methods, PayPal ranks as the leading choice among consumers, with 45% identifying it as their preferred payment solution.
Following closely are credit cards (39%), ACH/debit/checking account withdrawals (23%), digital wallet applications (18%), and in-app payment processing (16%).
Subscription business models face numerous challenges, yet payment-related complications emerge as particularly problematic for both customers and subscription providers alike.
Approximately 53% of consumers will terminate their subscription service when payment difficulties result in service interruptions. Conversely, research indicates 61% of consumers would readily commit to subscription services if granted the flexibility to select their preferred payment date.
A critical consideration for consumers when evaluating new subscription products or services involves cancellation simplicity. Many potential subscribers seek risk-minimized opportunities to experience subscription offerings.
Research from Brightback, a company specializing in retention automation software, discovered that 80% of consumers demonstrated greater willingness to sample or purchase new subscriptions when online cancellation options were available. Furthermore, their investigation determined that negative cancellation experiences resulted in:
During subscription termination attempts, organizations frequently deploy incentives encouraging continued membership. This strategy proves effective, as cancellation-stage incentives can decrease termination rates by 32%.
The previously referenced Brightback analysis revealed that the most successful approach to dissuading cancellation involves discount provision, with 49.13% of customers maintaining their subscriptions through this retention tactic.
Additional effective retention strategies include extending account credits, presenting downgraded subscription options, and offering temporary subscription pauses.
The intricacy of subscription business models has expanded significantly. Business founders now monitor numerous performance indicators, including churn, retention, and cancellation metrics. Alongside these analytical requirements, average company dimensions continue to increase.
Numerous billing and subscription revenue management enterprises have emerged to address the sector’s growth and increasing complexity.
Propelled by expanding market size and heightened demand for payment processing and analytics software, the subscription management and billing sector is projected to expand to $7.4 billion by 2027.
Community development has emerged as a predominant trend across all digital niches and verticals throughout recent years, establishing itself as one of the most potent methods for enhancing customer retention.
According to research findings, 66% of professionals report that their online communities positively influence customer retention rates.
By fostering communities, members can explore challenges and concepts while engaging with fellow subscribers, creating an environment of personalized support experiences.
Subscribers particularly value real-time interaction opportunities, with 74.5% of consumers stating that access to online community spaces makes them feel more appreciated as customers. Additional research indicates that 20% of consumers cite community belonging as a primary motivation for initiating subscription services.
Throughout this article, we’ve examined how consumer preferences are propelling the subscription economy trend across diverse products and services, while thousands of enterprises respond to meet this growing demand.
In the coming years, this trajectory is expected to continue, with further expansion of the subscription economy.
Whether you’re an entrepreneur seeking to capitalize on this momentum or a consumer fascinated by this evolving sector, we trust our subscription economy statistics have provided valuable and compelling insights.
We welcome your feedback and encourage you to share your thoughts in the comments section below!
The subscription economy is the term used to describe the business model of companies that sell products or services on a recurring basis. Some of the best-known companies that use the subscription model include Hulu, Amazon, Netflix, and AT&T.
As of 2020, the subscription economy market has grown to be worth $650 billion. Due to the rapid expansion of products and services being offered, the subscription economy is estimated to be worth $1.5 trillion by 2025.
Companies that use recurring revenue business models have experienced phenomenal growth, and the ecosystem has grown by 435% over the past nine years. Still, the subscription economy is set to grow even further. By 2025, it is expected to increase to become a $1.5 trillion market.
A conservative estimate would place the figure in the hundreds of millions globally. However, due to the vast number of subscription companies spanning every country, a precise number isn’t known.
As of 2020, the average consumer in the United States had 12 paid entertainment and media subscriptions. The total number of subscriptions is likely to be far higher, as these verticals only represent 34% of the total economy’s size.
Daniel NicFounder, SellingOnliceCoursesGuide.comis an entrepreneur and digital education specialist who founded sellingonlinecoursesguide.com, a platform dedicated to helping creators and educators successfully navigate the online course marketplace. Through his website, he shares insights and strategies for developing, marketing, and monetizing online educational content. His work focuses on empowering course creators to build sustainable online businesses while effectively sharing their knowledge with students worldwide.
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Copyright © 2024 by SellCoursesOnline
Daniel Nic is an entrepreneur and digital education specialist who founded sellingonlinecoursesguide.com, a platform dedicated to helping creators and educators successfully navigate the online course marketplace. Through his website, he shares insights and strategies for developing, marketing, and monetizing online educational content. His work focuses on empowering course creators to build sustainable online businesses while effectively sharing their knowledge with students worldwide.
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