Cerillion : Five Subscription Business Trends for 2019

The subscription juggernaut continues to roll in 2019. With many industries and businesses now fully embracing the subscription model, this year promises to be another big one for the subscription industry. So, what are the key trends to look out for in 2019? Shashank Venkat finds out

2018 was a landmark year for the subscription industry. While subscription giants such as Netflix and Spotify continued to dominate the market, big names including Apple and Disney also made announcements which spurred the market on. Now, 2019 promises to be yet another year when subscription models gain increasing acceptance as the default model for many businesses.
Here are five key subscription business trends to keep an eye on in 2019:
SVOD market saturation - We saw the first signs of this trend last year, but expect to see a further explosion of services in the video streaming space this year. While incumbents such as Netflix and Amazon Prime Video will try their best to maintain their lead, new subscription services from Apple, Disney and even Roku are expected to push them hard. In such a saturated market where all these businesses are competing for subscription dollars, we may see price wars or even arrangements like Netflix and Sky to sustainably compete in the market. Wall Street will also have its eyes on these organisations and early signals suggest that the road may not be smooth for companies such as Netflix. Subscription fatigue also emerged as a growing problem last year and combatting it will continue to be one of the biggest challenges for SVOD businesses in an increasingly competitive market.
Blockchain as a Service (BaaS) - Stemming from the larger B2B subscription market itself, Blockchain as a Service (BaaS) is expected to come into its own this year. While cryptocurrencies have gained all the media hype thus far, there are a number of blockchain-based pilot projects now being tested in the enterprise space. Many large businesses including Amazon, IBM and Microsoft have already stepped into the market. BaaS vendors will allow businesses to launch their own blockchain initiatives without worrying about the infrastructure and allied resources. The blockchain market itself is expected to generate $10.6 billion in revenue by 2023, which indicates that there is a significant opportunity for BaaS subscription services.
Privacy and data management in the spotlight - Several high-profile data breaches in 2018 highlighted that businesses are not doing a great job in managing the personal data of their users. Facebook was in the news for all the wrong reasons with the Cambridge Analytica scandal, T-Mobile lost personal data to hackers whilst the Marriott hack affected over 500 million global customers - all of which contributed towards privacy and data management practices grabbing the headlines. Add to that, regulations such as GDPR which also increased the responsibility for businesses managing the personal data of customers in the EU. With the regulatory tide already turning against unbridled personal data collection, we will see more countries and businesses implementing consumer privacy protection mechanisms. The state of California has already introduced the Consumer Privacy Act which will come into force from January 1, 2020. Lobbying Group ITI has also released a framework on data privacy to guide US lawmakers on future regulations. Some have even touted privacy as a service to become the next frontier for privacy. This will all have a significant impact on subscription businesses, most of which depend on storing lots of customer data and constantly engaging with their subscribers. It is therefore imperative to have robust data management systems in place to steer clear of regulatory, financial and customer backlash in 2019.
Subscription experience comes to the fore - Customer experience will increasingly stand out as a competitive differentiator for many subscription-first businesses. However, there is no set formula to attain the desired levels of customer experience - Netflix does it through superior technology and content offerings; Amazon does it through its breadth of services and slick ordering process; and Apple does it through its fully integrated hardware and software stack. While the approaches may be different, it is the end customer experience which makes these companies stand out among their peers. In increasingly competitive markets, the subscription experience will be an important growth strategy for businesses in 2019.
More industries harness the power of subscriptions - The automobile sector is one industry that was radically transformed in 2018 as many drivers shunned the age-old notion of owning cars for the ease and flexibility of a subscription plan. So which industries will be next? We think that IoT subscriptions will continue to make further inroads this year, spanning multiple verticals including smart homes, logistics and various new industrial / manufacturing applications. Industries like healthcare are also ripe for further disruption through subscription models, and we expect many more B2B software businesses to make the switch to SaaS-based subscriptions. However, spurred on by various smart city initiatives, perhaps 2019 will be the year that the public sector finally catches up - subscription government anyone?
Also read: Top Five Subscription Business Trends for 2018