The everything economy: On demand

There is a $3.5 Trillion (yes, trillion) opportunity knocking on the door for software and platform businesses. As the industry faces its continued battle not only getting consumer attention, but monetizing and keeping that attention we are seeing a new phenomenon: the “Everything Economy.”

The Everything Economy has emerged in response to the growing consumer demand for seamless access to a wide array of services through a unified platform.

In the past, consumers were willing to pay for individual subscriptions to various services, such as music streaming, video streaming, and food delivery. However, this model is no longer sustainable as consumers are becoming increasingly overwhelmed by the number of subscriptions they have. As a result, many consumers are cutting back on their subscriptions, with over 60% having canceled at least one subscription in the past year.

This shift in consumer behavior is creating an opportunity for new market entrants to offer bundled subscription products that provide access to a variety of services under a single subscription. These services are often powered by artificial intelligence (AI), which allows them to personalize the experience for each user and offer recommendations based on their preferences.

Big Tech brands have been investing in streaming, gaming and live sports – see Amazon’s recent investment in Diamond Sports Group, Alphabet’s YouTube strong subscription growth or Microsoft’s purchase of Activision Blizzard. More diversified revenue streams give them a safety net that pure-play media companies don’t have. These players are also supporting consumers’ lifestyles with services across other categories such as free shipping, grocery delivery, streaming video and music, photo storage, video game streaming, and pharmacy assistance. For example, now if you pay for Amazon Prime, you’re getting Grubhub Plus for free.

These companies are expected to grow more than two times faster in operating cash flow than legacy media (10.6% vs. 4.8%) during 2023-25.

Dr. Mark Grether, SVP and General Manager, PayPal Ads saw this trend first-hand during his time at Uber and discussed the opportunity behind diversifying platforms with more products and services.

“With consumers' desire for instant gratification driving the evolution of businesses, customized and on-demand product and service delivery is becoming the new norm. It is more than a matter of bundling a lot of services. It is about using data to understand customer behavior and customizing their experience,” Grether commented during a CES session.

In addition to the rise of subscription services, another factor that is contributing to the decline of the traditional subscription model is the growing trust in user-generated content (UGC). Consumers are increasingly turning to UGC for recommendations and advice, and they are more likely to trust the opinions of their peers than traditional media outlets. This shift is making it more difficult for traditional subscription services to compete, as they are unable to offer the same level of personalization and authenticity as UGC.

The rise of AI-powered subscription services and the growing trust in UGC are two major factors that are upending the traditional subscription model. Businesses that want to succeed in the future will need to adapt to these changes and offer subscription services that are personalized, convenient, and trustworthy.

It's clear that we are on the cusp of a transformative era. As we delve into the intricacies of the Everything Economy, it's evident that the landscape of content and commerce is undergoing a significant transformation. Companies like Apple, Amazon, Netflix, and Uber are at the forefront, leveraging their brand credibility and global relevance to potentially dominate this new market. However, the battle for market share is just beginning.

To thrive in this evolving marketplace, companies must focus on several critical strategies.

1. Understanding market dynamics and brand positioning will be crucial, as will the ability to offer a customer-centric and differentiated value proposition.
   
   
2. Designing an AI-ready company data architecture will provide invaluable insights into customer behavior, desires, and needs, which can then inform dynamic consumption pricing models.
   
   
3. A clear 'buy, build, partner' ecosystem strategy will be essential for companies aiming to accelerate their product and service mix and expand their distribution footprint effectively.

As this new economy unfolds, the companies that can adapt to these imperatives swiftly and strategically are likely to emerge as leaders in this new era.