My 2021 Predictions - Four things you can expect from Subscriptions

Making predictions in any sector is risky, but doing it in software and technology is particularly fraught. Things move so fast, and sometimes so unpredictably, that you can make a seemingly modest forecast in January and by December have egg on your face.

Despite this, long-term trends exist and in many cases give us a decent, if imperfect, hint at the future. With all this in mind, here are my four predictions for subscriptions in 2021 (and beyond).

1 - Subscriptions will lose their novelty (in a good way)

Subscriptions are not a recent phenomenon. Magazines, for example, have been offering them for decades. But what is relatively new is the Subscription Economy, an ecosystem that encourages companies to provide value to customers through a service rather than asking them to buy and own products.

I think in 2021 we’ll begin to see the idea of this system as ‘alternative’, and subscriptions as one-off curiosities really fall away. In fact, it’s been on the wane for a while. Zuora commissions research into opinions on and use of subscription across the world and the change across five years is illuminating. In Australia, for example, only about half of Australians had a subscription; now it’s more like four in every five. (You’ll be able to read the full 2020 report very soon, by the way.)

The reason why I think 2021 will be a watermark year is because the pandemic (and its accompanying restrictions) has accelerated this trend. As people were asked to stay at home, they considered how best to spend their time, and where once they might have had a single subscription – Netflix or Spotify, perhaps – in 2020 it became perfectly reasonable to have two, three or four. 

Now, that might have been Netflix and Stan and Disney+. But in 2020 people also began to see subscriptions as ‘normal’ for things that in 2019 seemed like they would eternally exist in the buy-and-own category. Cars – and Zuora customer Carbar here in Australia – is a good example. Last year a household might have experimented with two streaming services, a car service and a grocery delivery service. By the end of this year, I don’t think this kind of combination will be considered an experiment anymore.

2 - Social media will start offering paid options

Most social media platforms have been free for use from the start. And that model, when accompanied by ads, has served the likes of Twitter and Facebook incredibly well – until recently. Advertising revenue has plummeted basically everywhere during the pandemic - social media hasn’t escaped.

Subscriptions to the rescue? Well, maybe.

Subscriptions could kill the proverbial two birds by providing social media companies with consistent, reliable revenue and offer users the chance to remove irksome ads. But (and this is a very significant but) as Zuora CEO Tien Tzuo asked last year, is this a good application of a subscription model? There’s no bigger advocate of subscriptions than me, but they are not a panacea. If they’re implemented cynically and fail to offer value, they don’t work.

I’m confident that major social media players will start offering subscriptions very soon, but I’ll hedge my bets on whether they’ll be well-implemented and well-received.  

3 - The platform ‘wars’ will go to a new level

At the end of 2020 Salesforce agreed to pay about A$37.5 billion for Slack. Why? For many reasons, but possibly most pressing of all was Salesforce’s rivalry with Microsoft. Slack allows Salesforce to do more of what Microsoft offers its subscribers with Teams.

That’s just one example of how competition in this area is reaching fever pitch. Oracle, SAP and others have also been busy. The point is, in this industry (and in many others), making good products is really a minimum requirement. What sets you apart is creating a community that lets those who subscribe to your service interact, transact and learn from one another.

In 2021 the platform ‘wars’ will intensify, but this is a conflict that has the potential to lead to a better (work) world for everyone.

4 - Gaming will embrace subscriptions and never look back 

Yes, as I said in an article about game subscriptions last year, Microsoft offered its first video game service nearly 20 years ago. But, what the company has done with Game Pass Ultimate – its service combining downloadable games for console and PC, access to online play and now cloud gaming – in recent years is remarkable.  

Among gamers, there are mixed opinions on Microsoft gaming hardware, but there’s something close to unanimity on just how much value the average gamers gets from Game Pass.

And like any good subscription company, Microsoft isn’t resting on its laurels. It’s adding new services regularly. In 2020, Game Pass Ultimate subscribers also became EA Play subscribers for free. More partnerships like this, with some of the world’s largest game developers, are coming in 2021.

Although Microsoft is leading the pack, Sony and Nintendo will undoubtedly catch up quickly. Sony, for example, has known for a long time that hardware (the Playstation) can be a loss leader and that games are the golden goose. Now technology allows those games to be offered as immediately accessible services rather than as physical products – and gamers love it.