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Unsubscribe: Will the subscription model survive 2022?

a collection of soaps in their packaging
Photo by Karolina De Costa on Unsplash

2022 is bringing significant challenges for consumers, companies, and governments. “The great acceleration” and hope seen after COVID-19 of 2020 is grinding to a halt in most developed economies in the face of rising costs, supply restrictions and spluttering growth. It appears that we are in a downturn phase of the economic cycle, and we don't yet know when we'll emerge.

For start-ups and entrepreneurs, this means the uncertainty continues in the face of these new challenges, and evolving business models to meet them are increasingly needed.

The subscription future was rosy.

At the start of 2022, one of the key consumer trends predicted to continue was the demand for subscription services. ​​

Subscription services during COVID-19 saw rapid adoption alongside online retail and e-commerce platforms. Consumers' embrace of digital technology accelerated the trend. In 2020, consumers spent almost £1.4 billion on subscription box purchases, and providers made nearly 88 million subscription deliveries to customers across the UK. In the US, 81% of all adults were using at least one type of subscription service in October 2021.

This explosion of subscription growth was predicted to continue into 2022, but what do we mean by subscription retail? Subscriptions are regular (usually monthly) commitments to a product or service. However, the 'subscription' term has broadened to be a catch-all for many services, including membership clubs or even rewards programs that don't require the commitment and make it easy to opt out. Subscription models can be broken down into three different types:

  1. Access: Subscribers purchase access to content and exclusive products. The most common examples are media streaming services (Netflix, Disney+), magazine or news subscriptions (New York Times, Financial Times) and software (Adobe).

  2. Curated: Subscribers purchase regularly scheduled, curated "boxes" of products, frequently based around a specific category or theme like clothing (Fabletics), beauty products (Birchbox), or food (HelloFresh).

  3. Restocking: Subscribers sign up for regular recurring deliveries of specific products used frequently, often at discounted rates. Think razors (Dollar Shave Club), vitamins, household supplies, laundry detergent, and groceries (Able and Cole).

Subscriptions are nothing new. The Book of the Month Club was founded in 1926 and continues today, so why all the fuss all of a sudden? One reason is that subscriptions tapped nicely into several consumer needs that we saw accentuated during the pandemic, the need for delivery as we couldn't leave our homes, the desire to save money, the convenience of saving time and effort, and the desire for self-gifting.

They also provided several benefits to businesses, including increased loyalty, regular income streams, access to customer data and a closer relationship with customers.

Subscriptions were win, win.

vegetables in brown paper bags inside a delivery box

Time to unsubscribe?

Then we arrive in 2022 and inflation rates that haven’t been seen in decades are making consumers review their expenses closely and reconsider subscriptions. The Kearney Consumer Institute is predicting a subscription apocalypse. Their survey found that over half of subscribers wanted to reduce their subscription exposure, and 40% of the consumers think they have too many subscriptions.

A recent survey showed that younger consumers are more hesitant to sign up for new subscriptions and unsubscribe faster than other demographics. Gen Z consumers had the highest cancellations rates in the past year of all age groups at 17%, followed by millennials at 16%, and Gen X consumers at 11%.

Netflix is already feeling the results of this change in consumer attitudes. In April, its shares dropped 40% when it warned that its subscriber growth had reversed.

What does this mean for subscription providers?

This change in consumer demand requires providers to reconsider their offering to ensure it is valuable. Some things to consider might be:

  • Does your subscription service clearly deliver on the consumer's need for value and convenience in this new economic environment?

  • Are there opportunities to enhance value by bundling or combining with other services to offer more for less?

  • If your subscription is a curated one, are you delivering products that excite customers at the right time?

  • Are there other services you can offer that make subscribers more sticky, e.g., access to experts?

Whichever way providers choose to tackle this new environment, one thing is sure, a review of the subscription business model is essential, just like Netflix is looking to introduce advertising or clamping down on multiple users of one subscription. To succeed, providers need new ways to protect and grow revenue, and offer new services that consumers want now.


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