What to Know About the Next Phase of Subscription Services | Entrepreneur

Do you remember the time when Netflix was a DVD rental service that delivered DVDs to your home? You would be forgiven for thinking of those years as the distant past, but the company only switched its business model from delivery to streaming in 2007.

In just under two decades, subscription services have changed the way people shop, play and work. Businesses are also taking advantage of subscription services. As we head for the middle of 2025, though, the subscription economy is showing signs of yet another shift as it expands beyond digital services. What may the future hold?

Related: The Subscription Economy Is Growing Fast. Here’s How Your Business Can Adapt and Thrive.

The rise of the subscription economy

Subscription services have existed for hundreds of years. Since the early 1800s, consumers could access magazine subscriptions through the mail. In Britain, milk deliveries have been handled by subscriptions since the 1860s.

More recently, the subscription economy has become synonymous with a wide range of services from media to meal deliveries. As an ecommerce business model, subscription-based businesses have been outperforming their traditional counterparts for some time, with subscription revenues growing five times as fast between 2012 and 2018 as the average of the S&P 500.

At the end of 2024, reports showed that Americans were spending nearly $1,000 per year on subscriptions, with the entire market likely to reach a value of more than $900 billion by 2026. Consumers have clearly embraced the convenience and predictability that subscription-based services offer. Underlying this growth is a shift from an economy focused on ownership to one that values access more highly.

Who benefits from subscriptions?

Subscriptions have grown in popularity across demographics. While younger generations have been faster to adopt these services, almost every consumer segment has been won over by the combination of personalization, convenience and easy modification of the service.

Businesses benefit from predictable revenue streams and an unparalleled opportunity to drive customer loyalty. Subscription-based streaming services like Netflix not only allow businesses to learn consumer preferences for content, but they also make it easy to tailor content selections to meet those preferences and give subscribers more of the content they want, encouraging them to spend more time on the platform.

Compared to the traditional magazine subscriptions of several centuries ago, subscription companies often benefit from direct customer feedback by measuring whether someone streamed their suggested content or not. Magazine publishers of yesteryear had to rely on letters to the editor or receiving feedback via cancelled or growing subscriptions.

Related: Survival of the Fittest: 3 Reasons Your Subscription Business Didn’t Work

How subscription services are changing

Until now, we have focused on business-to-consumer (B2C) subscription services in this article, but a significant part of the industry’s growth and transformation has been driven by business-to-business (B2B) subscription models.

Before going into detail, let’s take a look at some of the industry’s overarching trends:

• Diversification is perhaps the most noticeable change in the B2C and B2B sectors. From physical products like cosmetics and services like movie streaming, subscriptions have moved on to offer access to software, car sharing and meal kits delivered to your door.

• Growing personalization is another major trend in the sector. Take Netflix, for example: Subscribers receive suggestions for content as soon as they finish watching a movie or series. Moreover, if a subscriber changes their viewing habits and doesn’t use the platform as regularly as usual, they’ll receive more emails from Netflix encouraging them to return and use the platform more frequently.

• Subscriber communities are another fairly recent addition to the economy. To encourage even greater brand loyalty, subscription providers are realizing the value of building communities around their products as opposed to relying on two-way communications between the brand and its users alone. Social media platforms, online forums and in-person events allow subscribers to connect with each other, therefore building greater brand loyalty in the long term.

New subscription services

Talent subscriptions:

Two of the most notable extensions of the subscription economy come from the B2B side of the sector — talent and hardware subscriptions. So-called talent subscriptions are changing the way HR professionals manage recruitment. Like with other subscriptions, companies pay a monthly fee to access recruitment services as and when they need them.

The main benefits of talent subscriptions include more predictable and manageable hiring costs, access to a talent pipeline and highly qualified professionals on the spot without long lead times and easy scalability.

Traditionally, companies faced escalating recruitment costs when they needed to expand quickly and grow their workforce fast. Subscription-based recruitment allows for this type of scalability but caps costs with the help of a simple monthly fee. Recruiters estimate that companies could save as much as 30 to 50% of the cost of standard approaches.

Hardware subscriptions:

Staying on the B2B side of the subscription economy, hardware subscriptions are becoming just as popular as software-as-a-service (SaaS) subscriptions have been for several years. Rather than investing in computers and other devices, hardware subscriptions allow businesses to access the devices they need when they need them without long-term commitment.

Related: How to Give Your Subscribers an ‘Ease of Ordering’

Consumer subscription trends

B2C subscriptions already cover a wide range of products and services. Noticeable trends in this area include a shift from acquisition to retention with the help of re-engagement campaigns and increased flexibility.

Industry experts have said that trial subscriptions have moved from being a conversion tool to becoming more exploratory, for example. Consumers are looking for greater flexibility and overall ease of use.

The subscription economy continues to be one of the most significant parts of the overall ecommerce sector. The demand for subscription-based products and services remains high in both the B2B and the B2C areas.

However, there is no guarantee of success for either long-term subscription providers or new entrants to the market. B2B and B2C customers’ expectations have grown in the past few years. To meet those expectations and drive retention, companies need to offer flexible subscription plans, products and services that are easy to use and deliver value immediately. Perhaps most importantly, personalization of services can drive long-term loyalty and growth.