Digital is changing landscape of certain subscription businesses, while also moving other non-subscription businesses into the subscriptions umbrella

1. Digital Disruption
in Subscription
Business
by Umer Iqbal
05-Jun-2016

2. Examples of Subscription Businesses

3. Characteristics of Subscription
Subscription
Cost
Newspaper, TV cable
Potential Cost
to Leave
Mobile package
discontinuation
Unlimited
Usage
Gym & fitness club
equipment
Addons
Option to add
packages or upgrade
at a price
Pay-as-you-go
Option for on demand
services at a price
Mobile phone calls
outside of fixed plan
Freemium
Option for free basic
service, and paid
upgrades
Certain TV channels
SIGs
Membership clubs for
Similar Interest
Groups etc.
Book reading clubs
(fantasy, literature...)
Renewal
Subscription renewal
is a point of decision
to continue or break

4. Consumer’s View
Convenience
Fewer financial
transactions
Less decision making
Cheaper
Longer term contracts
are cheaper for
goods/services
frequently purchased
Quality
Expectations
Subscription creates
a relationship, with
expectation for
quality sustainability
and enhancement
over time
Unlimited
Access
Unlimited use
subscription is good
for those who use a
lot,
… but bad for those
who don’t use
frequently
Upfront Cost
High one-time up-
front cost might
deter certain
customers from
subscribing

5. Provider’s View
Advance Payment
Advance payment, helps in
cash management, planning,
resourcing etc.
Customer Lock-in
...and potential to improve
brand loyalty
Big Data
Access to customer
personal information and
usage behavior can be
analyzed for better
planning, upselling etc.

6. Other Similar Models
Bait & Hook
Model
(Razors & Blades)
● Razors sold for cheap
● Blades sold at premium
multiple times

7. Digital Disruptions
in Subscription

8. Digital Disruptions in Subscription
Business Model
Modify the business
model through
digital means
Synergies
Create synergies
between
complementary
businesses
Customer Value
Create better
customer value
proposition
Segments
Add newer customer
segments
Profits
Minimal marginal
cost allows for
increasing profits
Scale
Technology allows
for ease &
economies of scale
Agility
Ability to quickly
adapt to changing
customer and
market needs

9. Freemium
Websites & Apps
Access to limited content/services for free
More access at a fee
Games
Certain levels for free or with ads
Advanced features at a fee
Purchase of add-ons (coins, gold, life etc.)
at a fee

10. Free
“If you are not paying for a product, then you are the product”
All services provided for free
Capture customer confidential information for
• Advertisement
• Cross sell other products at a fee
• Customer lock-in
• Brand loyalty

11. Ecosystem
Sell interlocking or interdependent set of
products
Make newer subscriptions easier from the same
provider, and more difficult from other providers

12. Digital Disruptions
to Subscription Businesses

13. Newspapers & Content

14. Books

15. Communications

16. Radio

17. Transforming Other Business into Subscription

18. Thank you