The Rise of Subscription Hubs

This is an excerpt from Parks Associates new study, Subscription Memberships and Bundling: Shopping, Video, Gaming, Mobile, a survey of 8,003 heads-of-Internet households in the United States fielded between 9/18/2023 and 10/03/2023.

Consumers are spending a lot of money on service subscriptions. Did you know...

• The average US Internet household has more than 5 streaming video subscriptions, spending nearly as much on these services as traditional pay TV.
• Fitness memberships have gained, but traditional gym memberships are still growing.
• More than one in five Americans belong to a health club or studio.? Fitness subscriptions can provide a more holistic health picture, as they often track various wellness indicators, and sync with wearables and other connected health devices (e.g., connected weight scales, glucometers).

Subscriptions are redefining how consumers access goods and services – and the channels for reaching those consumers.

Once strongly associated with periodicals, then pay TV and satellite radio, service subscriptions provide consumers access to a wide range of services, content, and apps. Their configurations range from simple premium plans layered atop limited free services to tiered offerings that include enhanced quality and quantity of advantages in the pricing framework of “good, better, best.”

Players in the growing Subscription Economy can be grouped into two broad categories:

1. Subscription providers offer one or more services to subscribers. These subscriptions may have multiple components or be part of a bundle.

• While Netflix is thought of as offering a streaming video service, it also provides access to a cross-platform library of games similar to Apple Arcade.
• Amazon is a subscription provider that offers distinct subscription services – like Audible – but also a bundle of services under Prime, which has many components.

2. Subscription aggregators market or manage access to one or more third-party subscriptions.

• Amazon is also a subscription aggregator because it offers access to third-party paid services via Prime Channels.
• Apple is both a subscription provider because of Apple One and its component subscriptions and a subscription aggregator because of the app store.

The attractiveness of the subscription model for suppliers has led companies that had traditionally offered services through other revenue models such as advertising or transactions to switch to a subscription model or add a subscription tier. Innovators and startups now come out of the gate offering or favoring a subscription model.

While many of these services compete in similar domains, their mix of deliverables—particularly for bundles that span diverse offerings, e.g., Amazon Prime—can cause marketplace confusion and opportunities. Increasingly, consumers will need better tools to understand, discover, and manage their subscriptions. Subscription providers will need better channels to communicate and market their offerings, and aggregators will want opportunities to better match consumers with the optimal and most profitable configuration of services.

Aggregators build value by developing subscription hubs.

Mobile carriers and ISPs historically suffer from poor NPS ratings – a key measurement of customers satisfaction and loyalty. ?To extend the service relationship around subscription offerings, ISPs and mobile carriers can create portals for their customers to discover, add, manage, and cancel subscriptions.

Verizon’s myPlan and +Play present an early example of a subscription hub.

myPlan keeps benefit customization simple while +Play focuses more on upsell and customization. Building out this concept would allow mobile carriers and other service aggregators compete more effectively with app stores.

Ultimately, the goal of the aggregator – whether that be a tech giant, retailer, communications provider, or other player – is to become an indispensable tool in the users’ management and payment of their lifestyle services.

Aggregators can do more to personalize subscription offers and make the experience of selecting and cancelling bundled subscriptions easy, and in the process create a very sticky relationship with their own customer.

Interested in this research? Contact [email protected] or any Parks Associates team member. Visit Parks Associates website for more information.