BMW is charging monthly fees for vehicle owners to access their heated seats, sparking blowback from consumers. Is it a canary in the coal mine for subscription-ization or just a speed bump on the road to an inevitable world of “plus” everything?
What was once the standard way to pay a recurring monthly cost for newspapers, cable, and music has mushroomed into a dizzyingly crowded space where just about any product can be sent to consumers on a recurring basis for a nominal fee. Netflix stood its ground as the industry standard for video streaming in the 2010s, but has seen its subscribers—and share price—falter as competitors like Hulu, HBO Max, Disney+, Amazon Prime Video, Apple TV, and many others entered the fray. Amazon has held strong as the first company to successfully capitalize on the e-commerce model and counts 150 million Prime subscribers, offering speedy next-day delivery that circumvents “need-it-now” convenience culture. Retailers like Walmart followed suit, though Target canceled its offering in 2020 due to a “lack of ROI.”
Services like BlueApron and HelloFresh send several new recipes per week in a neatly organized box. Can’t make the trip to Sephora? Birchbox delivers a monthly parcel packed with beauty and grooming staples hand-picked for each individual customer. Wall Street took note of its runaway success, and a jumble of new millennial-friendly companies rushed to get in on the action. Subscriptions now exist for workout platforms like Peloton and Nike, athleisure, Taco Bell, and even underwear. Will consumers ever reach a tipping point?
The answer may lie in BMW’s recent announcement of a monthly fee to access the heated seats in their cars. Each vehicle is already equipped with the functionality, but BMW has simply placed a software block that buyers must pay to remove. Predictably, the German automaker got dragged for what was widely deemed a greedy and exploitative move to nickel and dime customers to access hardware they already own. (This is your cue, hackers.) BMW is also upselling buyers to record footage from their car’s built-in cameras and access a library of engine sounds from the “IconicSounds Sport package.”
The result of the subscription gold rush, of course, is a profusion of lackluster offerings. Subscription boxes packed with new products lose their appeal if buyers aren’t interested in what’s being sent, with unused goods piling up or simply getting tossed. In 2016, when meal box services were still a novel concept, even the most outwardly successful companies reported losing up to 90 percent of new customers within six months. The abrupt cancellation of CNN’s streaming service, lazily titled CNN+, after five weeks of underwhelming viewership may serve as a cautionary tale for companies entering the space seeking a quick buck.
What was once a pandemic-era convenience has devolved into full-on fatigue. That doesn’t bode well for businesses hawking non-essential goods via subscriptions, especially as inflation persists. According to a CNBC survey, 35 percent of Americans have canceled a monthly subscription in the past six months as inflation fears loom, with roughly the same amount considering some course of belt-tightening if higher prices stick around. Experts predict a subscription shakeout is inevitable: Some businesses will close, others will place their products in physical stores, and those with strong name recognition may cash out and sell equity to existing companies. Still, the global subscription e-commerce market size is expected to increase to $120.04 billion in 2022 and reach a staggering $904.2 billion by 2026.
Despite weary customers, subscription models are showing unexpected potential in the slow-moving design industry. As people relocated en masse during the pandemic, brands such as Fernish, Conjure, and ZZ Driggs flourished by offering high-end furniture rentals for modest monthly costs as buyers tested out new locales. The newly nomadic workforce has proven successful—ZZ Driggs reported 45 percent growth month over month while the Dallas-based startup Nickson saw a 700 percent growth in revenue within the pandemic’s first year. Rental furniture also appeals to interior designers, who need to quickly stage their clients’ homes as they grapple with the months-long lead times of sourcing furniture from Europe and elsewhere.
“Subscriptions are built on the premise that consumers will always need fresh food or clothing or whatever,” Greg Portell, lead partner at strategy firm Kearney, tells Forbes. “In a highly inflationary world, they’re going to have to cut their budgets somewhere so those automatic purchases are not so automatic anymore and become much more discretionary. People want to control what they buy and when they buy it, and don’t want it forced on them.”