Tech Giants Drive Subscription Growth Across Consumers’ Daily Activities

Microsoft

From business to leisure, the largest tech companies are driving recurring revenue from every part of consumers’ day-to-day routines with their subscription offerings.

Take, for instance, Microsoft, which discussed in its earnings call last week growth in both its most work-focused subscriptions — its Office software suite and its LinkedIn Premium offerings — and its most entertainment-focused membership — Xbox Game Pass.

Specifically, the tech giant noted 18% year-over-year growth in Microsoft 365 subscriptions and a 55% year-over-year uptick in LinkedIn Premium subscription sign-ups.

Additionally, Xbox Game Pass’s “better-than-expected subscriber growth,” per Microsoft Chief Financial Officer Amy Hood, contributed to a 13% year-over-year increase in Xbox content and services, which in turn drove a $309 million increase in overall gaming revenue for the company.

Google’s company Alphabet, for its part, has also been seeing positive results from its subscription offerings, particularly around video streaming. The company shared on its own third-quarter earnings call last week that increases in YouTube subscription revenues led the company’s 21% year-over-year increase in “Google other revenues,” according to Chief Business Officer Philipp Schindler.

Meta is also making moves into subscription models. During the company’s third-quarter earnings call, Chief Financial Officer Susan Li noted the company’s early results with its Meta Verified program, offering creators on Facebook and Instagram additional features for a set monthly rate.

“[It’s] quite early here, but we’ve rolled out Meta Verified for creators to most markets globally,” Li said. “We continue to hear positive feedback from creators as we’ve helped them more easily establish their presence on Facebook and Instagram. We also have recently begun testing Meta Verified for businesses on Facebook and Instagram in select countries, and we have plans to expand that to businesses on WhatsApp in the future.”

Additionally, the company announced Monday (Oct. 30) that it is introducing paid monthly ad-free subscriptions in the European Union, the European Economic Area and Switzerland as data privacy regulations on the continent become more restrictive.

When it comes to shopping, meanwhile, eCommerce giant Amazon is growing not only its subscriber count but also each of those subscribers’ engagement. The company shared in its third-quarter earnings report a 14% year-over-year gain in subscription-related revenues. Plus, Chief Financial Officer Brian Olsavsky noted that improvements to delivery times have resulted in “increased purchase frequency by our Prime members.”

The moves come as consumers’ lives become increasingly digital, contributing to this shift. PYMNTS Intelligence’s study “How the World Does Digital: Daily Digital Engagement Hits New Heights” drew from a survey of more than 17,500 respondents in 11 markets that account for 50% of the world’s gross domestic product (GDP). It found year-over-year increases in the digital transformation of 8 in 10 areas of consumers’ daily lives. These areas include work, shopping and having fun.

Plus, all these areas are connected. For instance, the study noted that a 10% increase in digital engagement with shopping is associated with a 5% increase in digital engagement in entertainment and a similar increase in work.