Pandemic catapults subscription economy habbits change - The change in habits caused by the pandemic catapults the subscription economy far beyond streaming: cars, fitness classes and even beers or croquettes

Cars, gym classes, cleaning products, even beer or croquettes... More and more companies from more different sectors are experimenting with the subscription model. What seemed like a type of business only linked to software or audiovisual entertainment has become a trend that goes beyond technology and goes into increasingly tangible elements

"We live in the age of subscriptions," Tien Tzuo, one of the gurus of what has begun to be called the subscription economy, told. Tzuo is the founder of software company Zuora, a company specialized in helping companies to launch this type of business model. Among its clients are media outlets such as the US Financial Times or the British Guardian, technology companies such as Zoom or Sage and audiovisual entertainment companies such as DAZN; but also companies with products as tangible as the legendary electric guitar manufacturer Fender, with which he developed a monthly subscription service to guitar lessons, after discovering that 90% of its customers stopped playing it after 3 months.

Pandemic catapults subscription economy habbits change

What may seem to be a conjunctural trend is beginning to have a far-reaching economic future. According to the Swiss investment bank UBS, the subscription economy in 2020 reached a global size close to 650,000 million dollars (534,000 million euros), and in the next 5 years will grow at 18% annually to reach 1.5 trillion dollars (1.23 trillion euros). 51% of the global subscription market is in the United States, followed by Europe (21%) and China (14%), and at the moment it is dominated by technology companies (39%) and media companies, including audiovisual content there (34%).

In Europe, the subscription economy will reach this 2021 a size of 228,000 million dollars (187,400 million euros), 31% more than the previous year, and will grow at a rate of 23% annually to be close to half a billion in 2025 (481,000 million dollars, 395,000 million euros), according to data from the technology company Telecoming.

Pandemic catapults subscription economy habbits change

E-commerce will be the big tractor of this growth, with an increase of 25% according to this study, but after he reach a lot of services that figure prominently in virtually all hours of the day: from a subscription that gives you coffee each morning, to a machine of physical exercise, the use of a company's ride-sharing to commute to work, where they are used the tools hosted in the cloud, the subscription service of food for lunch, the monthly training courses digital, the already ubiquitous audiovisual streaming platforms and home security services.

"As technology disruption-and the pandemic-penetrates work and life, households and businesses are increasingly willing to subscribe or pay for digital services. This confidence towards digital subscriptions can uniquely position companies, technological or from other sectors, towards substantial business opportunities in the coming years, " says the head of the investment office of UBS in Asia-Pacific, Min Lan Tan, in the analysis of the investment entity.

Pandemic catapults subscription economy habbits change

Savings in costs, convenience and adaptation of the service to the needs are the great advantages for consumers. For companies the benefit is even greater: they get greater security in the income they will achieve during the year, they can better manage their cash by having recurring income, and this consumption scheme offers them direct access to the great manna of the XXI century, the data.

The growth of these models can also lead to abuse. The U.S. Federal Trade Commission (FTC) has already alerted consumers to complaints about companies starting to charge them monthly fees without consent, or making it very difficult to cancel a subscription. In 2020 he already won a lawsuit against the digital education company for children between 2 and 8 years old ABCmouse, which was fined 10 million dollars for not correctly reporting the cancellation conditions of its services. The U.S. regulator is looking at "all the tools" to combat such cases, including legal changes, an FTC spokesman told the Washington Post.

The macrotendencia it seems that is growing in Spain, in 2020, he became the second country in the world that most adults are customers of subscription services: 84% of spaniards over 18 years old pay any of these services, just behind China (89%), and ahead of the united States (82%) according to a study biennial that the company Zuora results for Spain are based on a survey of 1.048 adult users.

Pandemic catapults subscription economy habbits change

Spaniards are mainly interested in services of series and movies (70%), while other subscriptions, such as music (40%) or food delivery (29%) have fewer supporters according to this survey. What they value most is comfort (53%), variety (46%) and access to the latest (42%).

The great solidity of audiovisual subscription services in Spain is also verified in other sources with a much stronger statistical sample. According to the household panel of the National Commission on Markets and Competition, which periodically surveys almost 5,000 households and more than 9,000 people, half of Spanish households (49.6%) pay for an online platform to view audiovisual content. However, what they consume the most are not series and movies, but short videos (57.5%), followed by episodes of series, movies, content of friends, news, documentaries and sports content.

Spain is expected to reach 29.4 million active subscriptions in 2021, with an aggregate turnover of 3,170 million euros, 28% more than the previous year, according to Telecoming data collected Five Days. The estimates of this company consider that the video industry is the dominant with 33% of the market, about 1,000 million euros in turnover; followed by music (366 million expected for 2021) but also sectors such as podcast (117 million expected turnover for this year) or mobility services (16.8 million)

Pandemic catapults subscription economy habbits change: Beyond video and music, the mobility industry is one of the fastest moving in this business model. A 12.4% of Spaniards in 2020 made a daily or frequent use, at least 3 times a week, of scooters, motorcycles or bicycles of shared transport companies, according to a study by Moovit. Their share grew by 7% last year. Distrust in public transport, the use of which fell by 42% in the year of the pandemic, according to the same source, is one of the reasons. Most are pay-as-you-go services, but there are beginning to be subscriptions.

Cabify launched in September the urban bicycle service Bive+ that in addition to selling bicycles offers two subscription options: one that offers maintenance, repairs and insurance, and another of greater amount that includes the bicycle itself. The service, which began in Madrid and is already present in Barcelona, Valencia and Seville, has been doubling the volume of subscribers for 2 months, according to Cabify sources .

The subscription also reaches the car, once considered its property a status signal, but which has the renting model close as a way of consuming close to the subscription. In Spain there are at least two companies that offer this service: Vamos, which ensures that it grew to 120% due to the pandemic; and Bipi, which in the last year has added 16.5 million euros of financing between two rounds.

Bipi sources assure that they have been earning subscriptions for a year at a rate of 200% monthly, and that since the beginning of operations, more than 3 years ago, they have managed more than 10,000 vehicles, although they have not wanted to specify how many subscription users they currently have. In the last year they have doubled their workforce to over 100 employees.

Pandemic catapults subscription economy habbits change: Without leaving the site, another sector is growing dramatically in the subscription economy, driven by the pandemic. Physical exercise, which in the United States has as a great breakthrough the company Peloton, which offers stationary bicycles or treadmills, linked to a training service with monthly cost, and which has exceeded 1.6 million subscribers, 134% in a single year, according to its data for the second quarter of 2021, collected by the CNBC.

The' Spanish Peloton ' could be Volava, a Catalan company whose stationary bikes Sandra Viñas tested and which also offers a connected punching bag to install at home, with the same scheme of classes in streaming and a monthly subscription.

Its growth also shot up with the pandemic and continues: currently it exceeds 2,000 users, according to the founder of the company, Joel Balagué. Volava closed 2020 with a turnover of 2 million euros, and its perspective is to triple it in 2021, to reach a turnover of 6 million at the end of the year.

The subscription economy goes far beyond services, but can be extended to any product that is consumed on a recurring basis, opening up the great niche of food. Among them, the Spanish company Birrabox has developed a monthly beer subscription concept in which the user receives each month a box of six beers of different styles.

The withdrawal of nightlife from bars to homes by the pandemic caused its service, which in March 2020 had about 300 members, quadrupled in the 2 months of confinement to 1,200. They finished 2020 with 2,000 partners and a turnover of 100,000 euros; and this year they intend to triple their turnover to exceed 300,000, after closing the month of May with 2,200 users, as explained from Birrabox.

A derivative of the beer subscription, but away from home, is the idea of the Argentine company Pinta Libre, which offers a service of 4.99 euros per month with which the user can have a free beer every day in the restaurants and bars attached to the platform. This June he has arrived in Barcelona, with 10 locals in his debut.

The" age of subscriptions " that guru Tien Tzuo would say goes from global to local: from Netflix to something as Hispanic as croquettes. A firm called La Cocreta, which has several stores in the department stores of El Corte Inglés already offers a monthly subscription service by which it delivers 3 boxes each month, ready to fry or freeze. From the control of television, to mobility, exercise or stomach; nothing escapes the booming economy of subscription.

Pandemic catapults subscription economy habbits change