Over the past decade, subscriptions have boomed in popularity. Today, millions of consumers subscribe to thousands of products and services across every industry.
Almost every company has a subscription offering, and some of the most popular subscriptions include Netflix, Amazon Prime, and MasterClass.
The growth in consumer demand is set to fuel the subscription economy’s expansion to $1.5 trillion by 2025.
If you’re interested in learning more about the phenomenal growth of this ecosystem, consumer trends and behavior, and how companies win customers, these 27 subscription economy statistics are an essential read.
- 1. The Subscription Economy Is Set to Grow To $1.5 Trillion by 2025
- 2. Digital Subscription Companies Have a Market Cap of $14 Trillion
- 3. Subscription Businesses Have Grown 4.6x Faster Than the S&P 500
- 4. The U.S. Consumes 53% Of All Digital Subscriptions
- 5. The Average Monthly Spend on Subscriptions Is $273
- 6. 89% Of Consumers Underestimate Their Spend on Subscriptions
- 7. Millennials Lead the Way With 17 Entertainment Subscriptions Each
- 8. 98% Of Consumers Subscribe to a Streaming Service
- 9. Physical Products Are Set to Represent 45% Of the Subscription Market Value
- 10. eCommerce Subscriptions Are Set to Reach $904 Billion by 2026
- 11. The Subscription Box Market Is Expected to Grow To $65 Billion by 2027
- 12. OTT TV and Video Subscriptions Are Set to Reach 2 Billion by 2025
- 13. The Global SaaS Market Is Worth $152 Billion
- 14. The Creator Economy Has Tens of Millions of Subscribers
- 15. Patreon Creators Earned $1.5 Billion in 2021 Through Subscriptions
- 16. Udemy Business Has Grown to $293.3 Million in Annual Recurring Revenue
- 17. 36% Of Edupreneur Creators Plan to Start Offering Memberships
1. The Subscription Economy Is Set to Grow To $1.5 Trillion by 2025
The subscription economy is one of the fastest growing industries. As of 2020, millions of subscribers supported thousands of companies in building an industry worth $650 billion.
That consumers are increasingly moving towards the subscription purchasing model has become a prevalent trend. In fact, over the past nine years, the subscription economy has grown by 435%, and it is set to become a $1.5 trillion market by 2025.
Fueling this growth is a combination of consumers seeking more recurring products and companies creating subscription packages to grow their businesses.
Almost every company has started offering subscription packages due to the solid and predictable cash flow they can produce. In fact, the business model’s steady nature allows companies to expand, grow, and be more attractive to prospective investors.
By becoming subscribers, consumers get many benefits, including convenience, customization, and cost reduction. Streaming services, delivery companies, and ride-sharing apps are good examples of the kinds of businesses offering these benefits.
2. Digital Subscription Companies Have a Market Cap of $14 Trillion
A digital subscription is a product or service provided over the internet. Some of the most common examples are streaming services such as Netflix and educational platforms such as Masterclass.
Currently, the total combined market cap of all digital subscription companies stands at $14 trillion.
Streaming services are part of the media and communication services vertical, representing 34% of all digital subscriptions. Other industries included in the vertical include 5G, Wifi, and music streaming services.
3. Subscription Businesses Have Grown 4.6x Faster Than the S&P 500
Subscription businesses have outpaced traditional ones in the race for growth. According to Zuora Subscription Economy Index, subscription businesses have grown 4.6 times faster over the past decade compared to the S&P 500.
Why is this telling? Because the S&P 500 is a stock index of the largest 500 public companies in the United States, many of which are decades old and operate in traditional industries.
One of the keys to future growth for traditional businesses may be introducing membership and subscription models to their business plans.
For example, according to a recent report by Manifesto Growth Architects, 70% of businesses were looking to incorporate these monetization methods.
4. The U.S. Consumes 53% Of All Digital Subscriptions
The United States consumes 53% of all digital subscriptions, which is far beyond any other nation. In comparison, and despite having comparable populations, Europe’s combined consumers only represent 21% of all digital subscriptions, which is less than half of the United States’ share.
Many of the most successful digital subscription companies—including Disney+, Uber, Amazon Web Services, and Adobe—were founded in the United States, which may be a contributing factor.
5. The Average Monthly Spend on Subscriptions Is $273
The growth of the subscription economy resulted in an increased rate of consumer spending on subscription services.
For example, between 2018 and 2021, the average amount a US consumer spent on recurring purchases increased by $430 per year, which is a growth of 15%.
Today, the average monthly spend on subscriptions stands at $273, and this figure includes popular recurring purchases such as cell phone plans and wifi.
6. 89% Of Consumers Underestimate Their Spend on Subscriptions
The growing number of subscription purchases has led to consumers losing track of their spending. In fact, according to a West Monroe report, an astonishing 89% of consumers underestimate how much they spend on subscription services.
Some subscribers forget or are even unaware that they are subscribed to some services, and according to another report, Brits waste a staggering £25 billion yearly on unwanted and unused subscriptions.
As per the businesses, instead, many subscription services have seen their profits increase with zero incremental cost through unused subscriptions, as companies don’t incur any costs associated with unused membership.
7. Millennials Lead the Way With 17 Entertainment Subscriptions Each
In a recent study looking at entertainment and media subscriptions, Statista found that the average consumer in the United States had 12 paid subscriptions.
When considering the number of subscriptions by age, Millennials lead the way with 17 each, while the demographic with the lowest number of subscriptions was Matures, with just seven each.
The total number of paid subscriptions is likely far higher, as this study only accounts for one vertical.
8. 98% Of Consumers Subscribe to a Streaming Service
Video streaming subscription services are the most popular subscription model, with 98% of consumers subscribing to at least one service and 75% subscribing to two or more.
The most popular streaming services are Netflix, Hulu, and Disney+, each offering shows for different ages and audiences.
Other popular categories that consumers subscribe to are mobile apps (53%), news (39%), and box subscriptions (37%).
Box subscriptions are a rapidly growing part of the subscription economy, whereby consumers receive physical products directly at their doorsteps. In the past year, eCommerce subscriptions—which include box subscriptions—have grown by an enormous 65%.
9. Physical Products Are Set to Represent 45% Of the Subscription Market Value
In 2022, the total subscription economy is set to become worth $275 billion, of which physical products will make up 45% of the market.
Digital video and music subscriptions, instead, are estimated to generate the second and third most revenue this year.
The emerging daily essential subscription services trend has helped drive the industry’s growth. In particular, essentials such as medicines and prescriptions have seen an increase in demand since the pandemic’s start.
10. eCommerce Subscriptions Are Set to Reach $904 Billion by 2026
During the Covid-19 pandemic, eCommerce companies saw an unprecedented demand for their products, propelling the eCommerce subscription industry to be worth $72.91 billion in 2021.
However, Signs of demand haven’t slowed down. The industry is set to keep growing at over 65% year-over-year to reach a market size of $904.28 billion by 2026.
Verticals across the entire eCommerce subscription industry are seeing enormous growth. Last year, each vertical grew its monthly subscriber count by 43% on average.
According to a report by Recharge Payments, the sectors that are set to benefit from this growth include Beauty and Personal Care, Food and Beverage, and Health and Wellness, which made up 54% of the combined market size in 2021.
11. The Subscription Box Market Is Expected to Grow To $65 Billion by 2027
Subscription boxes have become a popular type of recurring eCommerce purchase. There are thousands of examples, including clothing, beauty, pet food, baby food, and fitness boxes.
Today, the market size of subscription boxes stands at $22.7 billion and is expected to grow to $65 billion by 2027.
One of the most popular subscription boxes is HelloFresh, a meal delivery service with recipes and ingredients. HelloFresh grew to 7.2 million users in 2021 after its subscriber base increased by over eight times in the past five years.
12. OTT TV and Video Subscriptions Are Set to Reach 2 Billion by 2025
The enormous increase in OTT TV and video subscribers is set to continue, and it’s estimated that the industry will grow to reach two billion subscribers by 2025.
For example, only at the end of 2021, Netflix, the most popular OTT subscription company, had grown to 222 million subscribers across 190 countries.
Three significant trends will propel this growth: traditional media outlets moving online, many companies incorporating subscriptions into their business, and 5G technology allowing for streaming on the move.
Additionally, traditional broadcasters will be forced to compete with the likes of Netflix, Disney+, and Amazon Prime for audience attention.
Suggested Reading: Top OTT Statistics You Need to Know
13. The Global SaaS Market Is Worth $152 Billion
SaaS (Software as a Service), also known as on-demand software, is the business of giving software access to subscribers using a licensing model.
Today, the industry has grown to house thousands of companies and is worth $152 billion. Some popular SaaS companies include DropBox, Slack, HubSpot, and Salesforce.
Dropbox was founded in 2008 as a file hosting cloud services company. Users can upload and host files on their cloud for a monthly fee. The company has grown to over 700 million registered users and 15 million paying customers, earning DropBox a valuation of over $8 billion.
14. The Creator Economy Has Tens of Millions of Subscribers
A recent trend in the creator economy is incorporating subscriptions and memberships into platforms. Some of the most prominent platforms have millions of subscribers supporting millions of creators.
Patreon and Substack are examples of subscription-based platforms. They allow fans to subscribe to creators, receiving exclusive content in return. Exclusive content includes newsletters, photos, videos, and Q&A sessions.
Many venture funds have invested in these companies to support the rapid user growth on subscriber-based platforms. For example, in 2021, Patreon raised over $155 million, and Substack raised $65 million to help expand their platforms.
Suggested Reading: Creator Economy Statistics & Trends You Must Know
15. Patreon Creators Earned $1.5 Billion in 2021 Through Subscriptions
Patreon is one of the leading subscription platforms that enables creators to connect with their fans. Through this service, users can subscribe to their favorite creators for a monthly fee to access exclusive content.
In 2021, Patreon creators earned $1.5 billion through the platform’s subscriptions. The top-earning creator was Tim Dillion, whose show has over 40,000 patrons, making him an estimated $216,886 per month.
Suggested Reading: Top Patreon Statistics: Creators, Earnings & More
16. Udemy Business Has Grown to $293.3 Million in Annual Recurring Revenue
Udemy is an online course platform through which creators can host and sell courses. The company monetizes courses through two methods: one-off purchases and subscription access for businesses.
Udemy Business has been growing quickly, and in 2021, the subscription revenue netted the company $293.3 million.
Online learning platforms are increasingly moving away from one-time payments preferring subscription models of monetization. One example of a platform that has made this transition is MasterClass.com, which has over one million paid subscribers.
17. 36% Of Edupreneur Creators Plan to Start Offering Memberships
Subscription-based memberships are gaining in popularity even for independent knowledge creators. For instance, Thinkific, popular course creation platform, found that 36% of edupreneurs plan to create a membership site in 2022.
Kajabi is a popular company that knowledge entrepreneurs use to host their membership sites. The platform found that 11% of all new products offered by creators were membership sites, and in 2021 that represented over 35,000 newly created sites.
There are many benefits that membership sites offer creators. Financially, one of the biggest is that they give a more predictable income stream. For users, the benefits of being a member include more ways to learn and consume content and greater access to course creators.
18. Free Trials Convert 61.7% Of Users
Subscription companies use a variety of offers to promote their products & services and free trials have to be the most significant one.
According to an AMIC media report, free trials retained 61.7% of consumers from the first to the second month. The same report found that paid trials retained 82.1% of users, which is even greater.
While retention from paid trials might look more attractive, it doesn’t take into account the conversion rate of website visitors to subscription trials.
So, it’s essential for subscription companies to experiment with offers and test what works best for their industry.
19. Slack Achieved a 30% Conversion Rate for Freemium Users
Another popular approach to marketing subscriptions is adopting the freemium model, where you have a limited free subscription and a premium subscription.
Slack, a popular communication platform, runs on a freemium model, giving its users access to a lifetime free account.
As per a report, 30% of Slack users convert their free accounts to paid accounts. This offer helped propel the company to over 10 million active users.
20. It Costs 5x More to Gain a New Customer Than to Retain an Existing One
Many companies spend vast amounts of money to acquire new customers through paid advertisements, so keeping users subscribed for as long as possible is essential to recoup the expenses and be profitable.
In fact, a recent study by Investpcro found that it costs five times more to gain a new customer than to retain an existing one.
Moreover, Investpcro found that once a customer has become a subscriber, their chances of buying another product or service increase to 60-70%, which further improves the customer’s lifetime value.
21. The Average Subscription Churn Rate Is 5.6%
The churn rate is a metric that describes how many existing customers are unsubscribing from the company. It is one of the most essential metrics when assessing the performance of subscription companies.
For membership companies to grow, their churn rate must be lower than the rate they acquire new customers.
Each industry has its own average churn rate, and, according to Recurly, the vertical with the highest churn rate of 10.54% is Box of the Month.
Recurly also found that SaaS has the lowest churn rate of all verticals at just 4.79%. Many SaaS companies sell their services to other businesses (B2B), which is why their churn rate is low.
22. Dollar Shave Club Has a 54% Quarterly Retention Rate
Dollar Shave Club is a direct-to-consumer brand focusing on men’s grooming products. In 2020, the company saw a boom in sales due to the pandemic trend of quarantine-beard and hair cuts.
The company has retained most of its new customers through its unique product offerings and convenient delivery model. Additionally, they bucked the industry trend of low quarterly retention rates with an industry-leading rate of 54%, as reported by Second Measure.
Subscription boxes tend to have a high churn rate and therefore a low retention rate. According to a Solvvy report, the average monthly churn rate in this industry is 20%.
23. Businesses Risk Losing 7.2% of Subscribers Due to Involuntary Churn
An involuntary churn is when a user unintentionally unsubscribes from a subscription company. The most common reasons for involuntary churn include failed payments, expiring cards, and credit card declines.
Businesses risk losing 7.2% of their subscribers each month due to involuntary churn. The number of users at risk of loss varies between industries, from a low 5.6% for healthcare subscriptions and up to 8.3% for consumer services subscriptions.
To combat this loss, many companies have started employing decline management strategies, including sending email notifications to customers and informing them about failed payments.
24. 80% Of Consumers Are More Likely to Subscribe if They Can Cancel Online
One factor consumers consider when subscribing to a new product or service is the ease of cancellation. Many customers are looking for a risk-free way to sample the subscription offered.
Brightback, a retention automation software company, found that 80% of consumers said they were more likely to try or buy a new subscription if they could cancel it online.
Brightback also reported that 80% of consumers claimed that if they had a negative experience with a company during the cancellation process they were less likely to purchase again.
As well as being less likely to purchase again, 79% of the surveyees said they would also be less likely to recommend the subscription to their friends and family.
25. Incentives Reduced Cancellation by 32%
When customers try to cancel a subscription, companies will oftentimes use incentives to encourage them to stay. There’s a good reason for this, as incentives offered during the cancellation process can reduce cancellations by 32%.
The same Brightback report that we previously mentioned found that the most effective way to change someone’s mind about canceling was offering a discount, with 49.13% of customers being retained through this approach.
Other successful retention methods include giving customers account credit, offering a downgraded plan, and pausing plans.
26. Subscription Billing and Management Is Set to Reach $7.4 Billion by 2027
The complexity of the subscription business model has increased dramatically. Founders now have many metrics to track, such as churn, retention, and cancellation rates. In addition to the metrics, the average company size is also growing.
Many billing and subscription revenue management companies have come up to support the growth and complexity of the industry.
Driven by the growing market size and demand for payment and analytics software, the subscription management and billing industry is set to grow to $7.4 billion by 2027.
27. 66% Say That Their Online Community Has Positively Impacted Customer Retention
Community building has been a major trend across all online niches and verticals over the past few years, and it has emerged as one of the most effective ways to boost customer retention.
As per a study, 66% of professionals say that their online community has positively impacted customer retention.
By having a community, users can discuss problems and ideas, and have conversations with other subscribers, creating a sense of personalized customer support.
Users deeply value real-time interaction, with 74.5% of consumers agreeing that access to an online community makes them feel more valued as a customer.
Suggested Reading: Top Online Community Statistics & Trends
In this article, we’ve seen how consumers are driving the subscription economy trend for all kinds of products and services, and how thousands of businesses are meeting this demand.
Over the next several years, the trend is set to continue with the subscription economy growing even more.
Whether you’re a business owner looking to ride this wave or a consumer intrigued by this sector, we hope you found our subscription economy statistics interesting and insightful.
We’d love to hear from you, so let us know in the comments what you think!