What Are You Subscribing To?
What Are You Subscribing To?
  • Lee Park Jeongeun
  • 승인 2024.03.04 10:31
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Noonsong gets her meals through the lunch box subscription service that her friend recently told her about. She also enjoys the latest broadcasts and songs through subscriptions to video and music streaming services. One day, while looking over her budget, she realized that subscription fees account for a high proportion of her spending.


A dimension beyond just possession

The subscription economy, which refers to consumers being able to use products and services by choosing the type that suits their needs, has been highlighted as an important foundation of economic activity. Subscriptions allow people to receive goods or use certain services on a regular basis for a set fee. There are three main types of subscription services. In the case of subscription services with a regular delivery date, the product is sent directly to a designated address on a date agreed on in advance by the user, such as a newspaper or milk subscription. On the other hand, there is also a rental-type subscription service, by which the user can pay to borrow a product and try it out for an agreed period of time. The video and music streaming subscription services constitute unlimited-type subscriptions. Among them, OTT services such as Netflix have recently attracted a lot of attention. According to the 2023 OTT Usage Behavior Survey released by the Korea Creative Content Agency (KOCCA) in December 2023, subscribers use an average of 1.8 paid OTTs, and the average monthly expenditure on OTT use is 12,005 won. This reveals that the OTT industry developed and widely used with the recent expansion of unlimited-type subscriptions such as streaming services. Like this, subscription is gaining more and more users.
With the popularity, the range of subscription targets has also expanded. A car subscription service operating under the name of SOCAR can be used at a monthly cost that includes rental, insurance and parking fees. As of February 17, the number of users of SOCAR exceeded 9,444,184. One office worker using this service said, "It is nice to be able to drive to work comfortably for a low price. Another advantage is that there is no stress about parking and no need to call a designated driver even if I have drinks in the evening."1) This shows that even for relatively expensive products such as automobiles, the use of subscription services is attracting attention. As the type and scope of the subscription economy diversifies, its economic value is also growing. According to the KT Economic Management Institute's Domestic Subscription Economy's Market Size survey in August 2023, it was estimated that the subscription economy's market size, which was valued at 40 trillion won in 2020, will expand to 100 trillion won in 2025. It implies that as subscription services satisfy people's needs and demand continues, the size of the market increases continuously. Professor Jeon Ho-gyeom of Seoul Venture University said, "There are more people who subscribe to several services at once. As such, the price sensitivity of subscription services has also greatly increased."2) High price sensitivity means that consumer demand can vary greatly with price changes and that it is relatively easy to replace one with another. In other words, subscription services are widespread enough to find and use similar other subscription services even if users are dissatisfied with a specific one. Therefore, subscription services are now gradually increasing in economic importance in our lives and the breadth of these services available to consumers is becoming wider.




Benefits that drive consumers to sign up

The expansion of the size and scope of the subscription market is also associated with the changing shape of households today. According to the 2023 Resident Registration Demographic Analysis published by the Ministry of the Interior and Safety on January 24, there were 9,935,600 single-person households among all households in Korea, accounting for 41.6 percent of the total 23,914,851 households. This is up from 40.31 percent in 2021 and 41.02 percent in 2022. The proportion of single-person households has been in the 40 percent range since 2021 and is gradually increasing. This continuous increase in the number of single-person households means that this situation will continue in the future. With this gradually increasing number of single-person households, there are a variety of services that allow people to subscribe to companies that provide meals or ingredients such as agricultural products. Uglyus Market, an agricultural subscription service, sells agricultural products that do not meet market standards in terms of quality, size, and price, and users can choose the size of the vegetable box and the delivery cycle. After using this service, Bang Hee-jin, an office worker, said, "It's annoying to stop by the grocery store every time after work to think about my meals. In particular, there are not many vegetables in small packages suitable for single-person households in the grocery store, so I recently signed up for a regular subscription service to receive various vegetables."3) These types of services are in demand in that they improve the quality of life of single-person households. Subscription services are becoming a highly utilized market platform while providing convenience to people, especially single-person households.
Purchasing the desired product at a reasonable price is an important factor in terms of consumer satisfaction. However, there are cases where consumers' preferences for rational consumption behavior are not met due to changes in the market, such as rising prices. With added inflation, the newly coined word "cherry-sumer," which combines cherry picker and consumer, is used as a metaphor for the strategic and rational consumption of only choosing the delicious cherries on the top of cakes. In the context of this demand for cost-effective consumption, some subscription services are gaining popularity as a rational consumption strategy as they offer discounts to subscribers. In the case of GS25, it offers a monthly subscription service of 2,500 won that allows people to purchase the coffee at a 25% discount. In addition to coffee, discounts on meals are also provided based on subscription. Similarly, another convenience store CU also offers a subscription service where users can get a discount coupon by paying a monthly subscription fee for products such as rice balls and lunch boxes through an app called Pocket CU. As a subscriber of Pocket CU, university student Kim Ji-in said, "With a 20% discount, I can get 10 lunches a month for the price of 8, so I think I'm getting good value for money."4) This shows that the merit of a subscription service is that it is relatively cheaper than buying a single unit without a subscription. In this way, subscription services can serve as a saving measure for consumers seeking value for money. Therefore, they are responding to changing environments and demands, encouraging more people to sign up.


Graph of the change in the proportion of the number of households


A wave of popular selling method

As the number of people using subscription services increases, it is affecting various fields. DearU bubble, a paid subscription service that allows users to exchange messages with their favorite celebrities, is gaining popularity among fandoms and subscription gifts for DearU bubble have become possible within KakaoTalk along with increased demand. Those who receive a subscription as a gift use the service for one month for free and decide whether to continue using it. This shows that the platforms for purchasing tickets to existing subscription services are expanding and accessibility is becoming easier. In addition to expansion of the sales platform, subscription services are also being used in attempts to develop cultural art. Sejong Center introduced a subscription service for the first time in the domestic performance industry, which can give up to 40 percent discounts on Sejong season performances throughout the year, for 39,600 won a year. As there are fans who watch a single play several times, these kinds of services work as a welcome event for such people, too. As such, subscription-type services are widening consumers' scope of choices, and are being utilized as a marketing strategy. A woman in her 20s said, "I loved the performance I saw at Sejong Center last year, so I kept waiting when I heard that a subscription service would be opening this year."5) This reveals that expansion of subscription sales formats into the cultural arts gives people the expectation to better enjoy cultural activities. Therefore, subscription services not only affect the improvement of accessibility, but also contribute to cultural development and participation.
Meeting consumer demand for various services, subscription services are now attempting to increase subscription fees to generate more revenue based on their popularity and market expansion. From December 2023, Netflix, a popular OTT subscription service, scrapped its cheapest basic membership of 9,500 won per month and raised the minimum basic fee to 13,500 won. For consumers who have been able to watch multiple videos a month with a minimum amount of less than 10,000 won, an increase of 4,000 won is burdensome in that it is the same as paying 48,000 won more for a year than before. A university student said, "As I am a student, I do not have much financial leeway, so I feel burdened to purchase the existing monthly pass at a time when OTT prices are rising."6) This means that changes in subscription fees can lead to changes in consumers' intention to use, which has the possibility of being perceived as a disadvantage. Along with discontent caused by the increase in subscription fees, subscription fatigue, which refers to the burden felt by the process of subscribing and paying for various subscription services, has arisen. Using several subscription services makes it difficult to pay attention to the regular payment date and amount. In response to this situation, subscription management service Whatssub aims to reduce consumers' subscription fatigue by collecting and summarizing all the subscriptions of users and sending notifications when the subscription payment date is approaching. It is sometimes difficult to terminate subscriptions, and it can cause inconvenience to consumers, so removing such obstacles will affect it in the long term. As services have emerged to help in the use of subscription services, the impact of subscription on people is also growing, and any attempt to increase subscription fees seems to be met with resistance from consumers.




To be satisfied longer on a regular basis

These days, subscription services are gradually expanding and are a large part of our daily lives. They are gaining in popularity since they enable convenient and efficient consumption as well as diversification of platforms and markets. However, with the increase of fees, subscription fatigue has arisen and as time goes by, the negative elements that can be felt from the consumer's perspective are also revealed. Therefore, it seems that consumers need to be aware of the features of each subscription service in order to continue to make wise consumption choices.


1) Seo Seung-taek, ""I Want to Return the Transportation Problem" Demand for 'Car Sharing' Spreads Among Office Workers", The Kyeongin Ilbo, November 24, 2023

2) Kim Da-rin, "The Dispute of SM Entertainment Is Ending… But the Unknown Dream of LG Home Training", The Scoop, March 13, 2023

3) Choi Ji-yeon, ""Perfect for Single-Person Households"... Vegetable and Fruit Subscription Services Spread", The Farmers Newspaper, March 10, 2023

4) Yoo Sun-hee, "Lunch for a 'Convenience Store Subscription Coupon'... How to Withstand 'Lunch Inflation'", The Hankyoreh, June 20, 2022

5) Park Ju-yeon, "The New Attempt at Sejong Center for the Performing Arts Worked... Sold Out on the First Day of Subscription Service Opening", Newsis, January 12, 2024

6) Yoo Ji-hee, ""I'm Looking For 3 Hours Of TVing Voucher"... OTT Subscription Fee Is A Waste Of 'Day-to-day' people", The Korea Economic Daily, January 17, 2024

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