brands evolve in their approach to subscription billing

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Page 1: Brands Evolve in their Approach to Subscription Billing

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Brands Evolve in their Approach to Subscription Billing

© 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

Page 2: Brands Evolve in their Approach to Subscription Billing

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Brands Evolve in their Approach to Subscription Billing

© 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

Subscription billing is one of the best ways to monetize a digital service, but it can be

challenging to settle on a rate that is effective for both users and the business. As a

result, companies often adjust their sources of revenue over the years, often making a

few surprising choices along the way. Netflix and WhatsApp both recently announced

significant changes to their subscription options, with Netflix upping its rates and

WhatsApp eliminating them altogether.

Netflix raises rates for HD

Netflix just bumped up its subscription fee from $7.99 to $9.99 per month for HD

streaming users. The starting subscription price for HD has been $9.99 for some time

now, but now those who are on grandfathered plans will also have to pay up, The Next

Web reported. Users who want to remain at the lower rate will have to sacrifice screen

clarity and go for standard definition instead.

Many are already criticizing the choice, believing it may alienate some of Netflix's most

loyal users. According to the Next Web, with rising competition in the streaming video

space, it may not be smart to increase prices now. According to the publication, Netflix

doesn't expect an unusual amount of churn as a result of the decision, but it remains to

be seen whether the brand's expectations are correct.

Page 3: Brands Evolve in their Approach to Subscription Billing

3 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

Netflix will raise prices for grandfathered subscribers.

Page 4: Brands Evolve in their Approach to Subscription Billing

4 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

WhatsApp eliminates subscription fees

Meanwhile, WhatsApp, a cross-platform messaging service, recently announced on its

blog that it will eliminate subscription fees on its platform, raising the question of how the

Facebook-owned company will continue to sustain its service. At 99 cents per year, the

subscription fee was never substantial to begin with, and users are only required to pay it

after a full year of free service. However, the company still ran into issues with its

customer base. For instance, many users don't have a debit or credit card number, which

made it difficult to sustain their accounts after the first year.

While you might assume WhatsApp will substitute third-party ads for its subscription

revenue, the company argues this won't be the case. Instead, it will partner with other

companies to allow these businesses to communicate with WhatsApp users through the

platform. As Business Insider pointed out, this "app-within-an-app" approach mirrors that

of Chinese messaging app WeChat.

"The app-within-

an-app model

could be the

future of mobile."

WeChat allows users to access many different services within

its service, including the ability to hail taxis, purchase movie

tickets and even donate to a charity. Essentially, this enables

users to make in-app payments. In other words, rather than

gaining revenue from consumer subscribers, WhatsApp will

likely switch things around to gain recurring payments from

businesses that want to reach consumers through the app.

Page 5: Brands Evolve in their Approach to Subscription Billing

5 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

The change represents an interesting shift and also demonstrates a new potential

direction for the app environment. According to Venture Capital firm Andreesen Horowitz,

the app-within-an-app model could be the future of apps and mobile commerce. For

instance, the WeChat app hosts millions of apps in its ecosystem, much like the Internet

hosts Web pages.

Powered by subscription billing

In a rapidly changing digital environment, companies need the support of a

versatile subscription billing platform that can evolve with them, whether they need to

increase fees or change to a different form of revenue generation. Moving from

traditional subscription billing to micropayments could be extremely difficult without the

right software to back you up. In addition to versatility, it's crucial that companies can

utilize user data to make informed decisions regarding any substantial changes to their

subscription billing fees. Subscription-based models could be the future of payments, but

it's important for brands to invest in high-quality partnerships to make it happen.

Page 6: Brands Evolve in their Approach to Subscription Billing

6 © 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.

About the Author: Bryta Schulz

Bryta joined Vindicia in 2013 and serves as Senior Vice

President of Marketing. She is responsible for building brand

awareness, creating go-to-market strategy and promotion, and

driving growth. With over a decade of executive level marketing,

product management and PR experience, Bryta has led

marketing teams in enterprise technology and SaaS companies.

Her experience includes heading product marketing at GoGrid,

PGP, RSA and Symantec and business development and

product management positions at Xcert, Thales, and

Persistence Software. Bryta holds a MA in Translation from the

Johannes Gutenberg University Mainz and an MBA from the

University of Reutlingen.

Visit our Blog for more information.

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Thank You

© 2015 Vindicia, Inc. All rights reserved. Vindicia Confidential.