Winners in the Subscription Game

Shepherding a subscription-based business to financial success can be challenging to say the least. Here’s an encouraging collection of business that overcame those challenges to become leaders in their industries, and how they have been able to keep customers coming back, cycle after cycle.

Morningstar

This is one of those rare cases of paper media subscription services that successfully survived the transition online. Originally, Morningstar produced a bound booklet called the Mutual Fund Sourcebook. In the 1990s, the company updated to a CD-ROM and then a website with restricted access. Unlike most print media companies that struggled to retain subscribers, Morningstar concentrated on original research while expanding their consulting services and acquiring valuable add-ons in order to charge upward of $16,000 for a corporate license.

Empire Avenue

Combining virtual goods with microtransactions can be one of the best ways to keep subscriptions fresh. Empire Avenue gamified online influence, similar to Klout, by creating a mini-Wall Street with online profiles as the commodities. Eaves, the virtual currency in the game, have turned into real revenue for the Canadian company as the financial significance of social influence has taken off in recent years. A variety of premium account options complements their main revenue source to even out unpredictability in their core pricing model.

BirchBox

This six-year-old Internet startup from New York proved that it’s possible for any kind of business to thrive on a subscription model, even in the highly individual and fragmented makeup market. Subscribers complete “beauty profiles” to receive individualized boxes of four or five makeup samples every month. Online tutorials show members how to use them. An e-store devoted to beauty products allows both subscribers and non-subscribers make purchases, but subscribers also get promotions and discounts. As a result, 50 percent of their 400,000 subscribers buy from their e-store.

Activision Blizzard

Between World of Warcraft and Call of Duty, Activision demonstrated how to make games that people want to play. Their challenge was convincing players to commit to subscriptions in a marketplace crammed with gaming options. Their strategy has been a dedicated stream of expansion packs and continuous in-game improvements. Meanwhile, they are working to turn Call of Duty and Skylanders into Hollywood movies after having success with toys based on Skylanders, in order to help keep Activision games relevant and popular.

Citrix

A technology company from the 1980s sounds like the beginning of a history lesson, but Citrix has been able to remain on the cutting edge of virtualization and mobile video infrastructure. They were one of the early movers into mobile hardware and it paid off as NetScaler; their telco-grade application delivery controller now serves Tier 1 service providers. Video on mobile is very sensitive to data interruption, so Citrix started with user experience and worked backward to create a platform with the scale, agility and integration requirements that their subscribers needed.

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