We examined 20 organisations that have started to build a subscription marketplace across a wide range of industries. Our analysis identifies the critical success factors telcos need to capture this opportunity.

Rise of the subscription economy

In recent years, the subscription business model has become increasingly popular. For service providers, it creates more predictable revenue streams, promotes increased customer loyalty and provides them with useful customer data on what consumers value. For consumers, it provides greater convenience and enables them to tailor their service experience to their individual preferences. This helped the market reach a value of US$120 billion by 2022, and it is expected to surpass US$1.5 trillion by 2025 (UBS Wealth Management). However, the widening array of services on offer has led to consumers experiencing “subscription fatigue”, driven by challenges around subscription management and poor user experience.

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Customer loyalty is central for subscription marketplaces

Despite these challenges, there remains an opportunity to capture the growth of subscription services adoption by centralising the management of these services across one aggregated platform. This format is generally known as a subscription marketplace and is broadly defined as: “a single platform or service that aggregates, offers and allows users to identify and manage a variety of subscription-based products and services from multiple different providers”.

There are several players including payment, utility providers, retail brands or telecom operators who have the pre-established consumer relationships to capture this opportunity. Telcos, for instance, already have a regular, trusted and reliable billing relationship with customers. Customer loyalty is at the heart of a subscription marketplace and telcos need to successfully build on their pre-established and trusted relationship with consumers to successfully drive the flywheel for scale. On the other side of the platform, they need to ensure and encourage partner participation to drive scale both across the supply and demand side. See the graphic below.

The flywheel for success in the subscription marketplace

Source: STL Partners

Table of contents

• Executive Summary
  • Recommendations for driving the subscription marketplace flywheel
• Introduction: Rise of the subscription economy
  • Customer loyalty is central for subscription marketplaces
• Service and commercial model selection is key for marketplace success
  • Telcos must select services beyond content streaming
  • Telcos must select the correct commercial model
• Outside selection, telcos must invest in their customer experience
  • Trial periods and incentives
  • Cross-service integration
  • Easily navigable platform
  • Billing integration
  • Flexible payment models
  • Optimised notifications
  • Ability to transition subscription partner
  • Telcos need to offer best-in-class customer experience
• Telcos need to build partner participation
• Recommendations for telcos
• Profile: Amdocs Subscription Marketplace
• Appendix 1: Research overview
• Appendix 2: Examples of subscription marketplaces

Related research

• Consumer manifesto: How telcos can grow their consumer business
• Consumer Digital Services Playbooks
• Reinventing insurance: The role of telcos
• Can telcos compete in the new TV market?

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Author

Henry Osborne

Consultant

Henry is a Consultant at STL Partners and brings with him a background in internal strategy in the Technology, Media and Telecommunications (TMT) industry. Since joining STL Partners, he has worked on a variety of topics including private networks, edge computing and B2B growth opportunities for operators.