Sam Jordan, Executive Vice President North America of Manifesto Growth Architects’ discusses whether the future of tech is likely to all be subscription-based:
The media and entertainment industries have been massively disrupted by technology. Here more than almost anywhere else, the market leaders are acting as new digital players operating with subscription models.
Technology has created the perfect environment for these subscription-based businesses to thrive, providing greater competition, the digital delivery of services, on the go consumption, high volumes of ever-changing products/content and highly engaged, demanding consumers.
And for the businesses, subscriptions offer some compelling advantages over previous business models; recurring revenue and greater revenue visibility, direct/deeper customer relationships, and greater loyalty. However, they rely on technology to provide the customer experiences that help keep these customers engaged.
So tech in these markets is at the heart of a customer experience arms race. But the market opportunities and inherently more attractive business models afford the businesses operating here the ability to invest heavily.
We’ll only see more and more of these exciting tech-driven propositions coming to the market, to the point where plenty of people might turn this statement around to say that the future of all subscriptions is technology. However, in truth the technology is simply an important enabler.
The product/content is key – Netflix spent $12bn on original content in 2018 and Amazon spent $5bn. And beyond this, how you decide to use technology is always more important. However, the tech-driven changes that have led to subscriptions being the preeminent business model in these sectors are sweeping through every industry, so expect subscription tech to transform more and more industries from retail and automotive to utilities and financial services.