Problem: When you subscribe to something, you don’t built any equity or ownership. As soon as you cancel your subscription, you lose access to whatever you used to have. This phenomenon also happens with rent.
Solution: A platform that specializes in creating financial instruments focused on the intersection of monthly subscriptions & marginal cost to own. For example, Disney recently released Hamilton on Disney+ (over a year early, too) and is requiring that people subscribe to Disney+ in order to access it. What if, in addition, Disney allowed people to download the video and own it at a marginal cost, like an additional $0.99 or $4.99? Since subscriptions are often in the back of consumers’ minds (they only pay once a year or once a month) it’s much easier to sell add-ons to consumers once they are already on a subscription service.
This business would take a model that is already proven in gaming (in-game purchases) to generate new revenue sources for subscription companies. This model is extremely successful in gaming (69% of Fortnite players have bought in-game purchases and the average spend is $85, netting over $2.5 billion annually), but has not been applied in other contexts. In their article on how the “Pandemic Forces Studios to Think Outside the Box on Movie Releases,” Jessica Toonkel and Tom Dotan describe the pros and cons of a similar rent-to-buy option:
Introduce a rent-to-buy option. Give consumers the option, once they have rented a movie, to pay a little extra to own the film.
Pros: This could drive more purchases of movies, as people would only fork over the extra money once they know they’ll like it enough to watch it again.
Cons: Such an approach would only work for certain kinds of films, particularly children’s movies that kids are likely to watch repeatedly.
This would be an innovation on the subscription-as-a-service and general subscription-based business models that have been extremely popular given the democratization of the internet.
Monetization: Selling installment subscriptions as a service, or building a platform that takes a percentage of revenues to create these unique installment subscriptions.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)