Samjong KPMG "Global Subscription Economy Investment Scale Increased 3.6 Times in 10 Years"

[Asia Economy Reporter Ji-hwan Park] As the subscription economy emerges as a new consumption paradigm, an analysis shows that all industries have entered the influence zone of subscription business. In particular, the global investment scale in the subscription economy market has increased 3.6 times over the past decade.

According to the report "Digital Subscription Economy Trends and Business Opportunities" published by Samjong KPMG on the 24th, global private equity (PE) and venture capital (VC) investments in subscription economy-related companies increased 3.6 times from $2.552 billion in 2010 to $9.286 billion last year. The number of investment deals rose 4.5 times from 82 in 2010 to 369 last year.

Investors' interest in the subscription economy is even more pronounced in individual deals. Last year, there were a total of 14 (3.8%) mid-to-large scale investment deals exceeding $100 million related to the subscription economy. This is more than double the 6 deals (1.3%) recorded the previous year.

This indicates that subscription services are evolving into a business model applied across all industries. The types of subscription economy models are diversifying further according to industrial characteristics.

The subscription economy refers to economic activities where consumers pay a subscription fee for a set period and regularly receive the necessary products or services. Subscription businesses, which were mainly conducted offline like milk or newspaper delivery, are expanding into all industrial sectors with the development of digital platforms.

In the distribution and consumer goods industries, digital native vertical brands conducting business based on digital channels are leading the subscription economy. Large distribution and consumer goods companies are expanding mergers and acquisitions (M&A) investments in small to medium-sized startups with strengths in subscription services.

In the media, content, and gaming industries, competition to attract users is active through differentiated content and subscription-based revenue models. In the mobility industry, services such as Mobility as a Service (MaaS), where transportation means are provided as a service, as well as the serviceification of mobility overall including car options and parts, are emerging. In the healthcare industry, daily health management through subscription models is spreading.

The report also analyzed that global investors' interest in the subscription economy is expanding. Global investors have been continuously investing in subscription economy-related companies for over a decade, focusing on the ability to generate recurring revenue during a fixed contract period.

As the subscription economy market expands and investment funds concentrate, the subscription economy is growing into a unicorn business. The report stated, "Subscription economy-related companies are emerging in various sectors such as distribution and consumer goods, e-commerce, media and entertainment, ICT (Information and Communication Technology), automotive, finance, healthcare, and education," and added, "As investors who highly evaluate the growth potential of subscription economy businesses increase, the investment enthusiasm for related companies will continue."

Among 'Exicorns'?unicorn companies that have successfully exited?companies successfully operating businesses based on subscription models include Shopify (Canada), Hims (USA), Peloton (USA), HelloFresh (Germany), DocuSign (USA), and Spotify (Sweden).

Tae-young Hwang, Executive Director of Samjong KPMG's Digital Division, said, "The digital subscription economy era is fully opening alongside consumers who value experience over ownership," and added, "Companies need to proactively prepare for changes in the business ecosystem based on establishing and executing mid- to long-term roadmaps related to digital subscription business."

He continued, "Especially in the digital subscription economy market led by startups, existing companies need differentiated strategies according to their industry group and position for successful subscription economy businesses."

This content was produced with the assistance of AI translation services.