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The Death of Subscription Businesses
Netflix has shown us the bubble is about to burst
I’ve been saying the same thing for years.
On December 31st, 2019 — right before New Year’s Resolutions, I wrote an article about how every niche in business, is a bubble.
The supply always suffocates the demand. Because if you create something successful, you give birth to your demise.
Success breeds competition. Competition dilutes market share.
Year to date, Netflix’s stock is down over 40%.
Why? Competition from Disney+, Hulu, HBO Max, Amazon Prime, etc.
They cannot continue to gorge themselves on the feast now that many others have joined the table.
Maybe we’ve reached the pinnacle of ‘subscription-model’ businesses. People only have a finite amount of disposable income and time — and they can’t subscribe to everything.
There’s just too much choice now.
New and exciting services will suffer from a higher customer acquisition cost… and a ridiculously high churn. Meaning newcomers and independents will have to find a new model.
Worst still, if we hit a much-expected economic downturn, the first thing people do is cancel their luxury monthly recurring charges and consolidate their spending.
Subscription businesses are terminal.