We now officially live in a subscription economy… and it’s worth trillions of dollars.
The global live streaming market is predicted to hit $247 billion by 2027 …
By the end of next year, IDC expects that 53% of all software revenue will come through subscription models.
Some analysts think the car subscription market is set to grow by over 70% next year.
It’s all about recurring revenue. And it’s one of the biggest trends of the decade because it dips into multiple trillion-dollar industries at once.
This is how we spot a megatrend. In the past 5 years, when the subscription economy was gaining its foothold …
Netflix (NASDAQ:NFLX) has given investors returns of over 432%.
Adobe (NASDAQ:ADBE) has gained over 400%.
Zoom (NASDAQ:ZM) is up over 393%.
Salesforce (NYSE:CRM) has soared 170%.
The idea of recurring revenue has been around a long time, but the past three years have seen it become a huge megatrend.
When you apply it to the auto industry, you could get a serious disruptor of our views of car ownership. Just like Adobe made it possible for so many more people to use its high-end software packages, so might car subscription services make it that much easier for people to drive a car--or a second (or third) vehicle.
When you add in the EV element and its soaring demand, you get what we think is one of the best innovators in this tech-driven field: Facedrive (TSXV:FD,OTC:FDVRF).
The innovative pioneer of EV-based ride-sharing has been scooping up like-minded companies and adding EV tie-in verticals at a rapid pace for the past 12 months, and it’s way ahead of the coming megatrend: subscriptions plus eco-friendly verticals.
A recurring, green revenue growth machine
Facedrive isn’t profitable--yet. That’s the point. This is a tech revenue growth potential play, which means the company is still on the ground floor at the crossroads of multiple megatrends: EVs, subscriptions, eco-friendly high-tech solutions.
Over the past 12 months, Facedrive’s revenue has grown by 552%, while its share price over that same period has risen by over 275%.
That attracts a lot of attention from people who are looking for the next big thing in these high-tech, multi-industry crossroads. They’re looking for high-growth potential innovators that understand where trends meet the planet.
Aiming to be a car ownership disruptor in the explosive EV space
EV sales jumped 43% in 2020 while overall car sales plummeted by 20%, and now, one research firm predicts the car subscription market is set to top $12 billion by 2027.
All the big car makers are trying to get on this, from Porsche to Volvo… and even to Hertz itself, which sees a huge opportunity here after a rough bankruptcy.
Millennials--our biggest consumer group--don’t like to buy. They can’t afford to own, or have all the expensive responsibilities that come along with ownership. They’re loyal to brands, to lifestyles, and to the environment. They want a choice, and they want it on-demand.
When Facedrive acquired Washington, D.C-based Steer in Q3 2020, it was with this heavy trend in mind.
Steer is all about flexible, hassle-free choices. It’s an all-inclusive, monthly, risk-free car subscription service that features 100% electric, plug-in, and hybrid vehicles. Steer means no more car dealership haggling; no more insurance; no more financing; no more mileage limits; no more long-term commitment to something that you want to trade-in in a year, or earlier.
And there was no low carbon subscription option for that rapidly growing lineup of new EVs… until Steer.
It comes with your own virtual gallery of shiny new EVs ...
And this could be the grand finale of the complete mainstream adoption of EVs.
Again, this is all about revenue growth potential …
And there is one number that speaks volumes: 70% of Steer members have never even driven an EV before. That’s a percentage of new converts that a car dealership could only dream of. GM didn’t get that response even when it all-Americanized its EV offerings via the Super Bowl.
A brilliant game of leverage
This isn’t about costly car manufacturing.
It isn’t about selling customers on one of the many new EVs being rolled out.
It’s not about expensive infrastructure.
We think it’s a brilliant strategy for leveraging the products of auto giants to build out Facedrive’s vast EV-related ecosystem.
That’s what Uber did, though it missed out on the environmental angle--in a big way.
And Facedrive (TSXV:FD,OTC:FDVRF) has more verticals. In addition to its pioneering carbon-offset ride-sharing and food delivery verticals, it’s got American Steer, and that takes things beyond Uber’s plans.
Facedrive is creating exactly what Millennials want--an entire lifestyle that makes sense in this world, at this time. And revenue growth is exactly what investors are looking for in this next-gen tech-driven playing field.
This is definitely one to watch.
The Subscription Model Is Booming
AT&T (NYSE:T) is a veteran in the subscription business. From telephones to television, AT&T has been a dominant force in this world for ages. And thanks to its noteworthy acquisitions of Time Warner, HBO and Turner Broadcasting, AT&T has one of the biggest footprints in the streaming industry…with the potential to grow even larger.
With its almost incomparable array of assets, AT&T’s streaming services stand to draw a lot of interest. And while it does not approach the industry in the same way that Disney or Netflix has, the telecom giant is still likely to emerge as a winner. HBO alone already has over 44 million U.S. subscribers, and that number is expected to skyrocket in the years to come.
CEO John Starkey noted in a press release, “Our number one priority in 2021 is growing our customer relationships. It’s about more than just adding to our customer base. It’s about expanding the growth opportunity in our three market focus areas and also increasing our share within each market.”
Lyft Inc (NYSE:LYFT) is also rolling out a new subscription platform. For just $19.99 per month, frequent Lyft users will be able to enjoy a variety of benefits, including a 15% discount on all rides, priority airport pickup, relaxed cancelations, and even surprise offers.
Lyft has taking a strong stance on its green initiatives. In fact, it has even rolled out a massive push to fully-electrify its fleet within the decade. The company is already working closely with its partners and policymakers to make electric vehicles more accessible to its drivers, but the best is yet to come.
John Zimmer, co-founder and president of Lyft explained, “Now more than ever, we need to work together to create cleaner, healthier, and more equitable communities,” adding, "Success breeds success, and if we do this right, it creates a path for others. If other rideshare and delivery companies, automakers and rental car companies make this shift, it can be the catalyst for transforming transportation as a whole."
Video streaming giant, Netflix Inc. (NASDAQ:NFLX), is just coming off a banner year whereby the company’s subscriber tally set new records, managing to once again shrug off intense competition from streaming rivals. Netflix gained 37 million new subscribers in 2020, easily besting its previous record gain of 28.6 million new subscribers in 2018, to finish the year with 203.67 million paid subscribers worldwide. Obviously, Netflix had Covid-19 and the stay-at-home trend to thank for the massive growth as consumers sheltering at home turned to streaming entertainment in droves.
Kevin Westcott, Deloitte’s vice chairman and U.S. tech, media, and telecom leader, has just told Fortune that streaming services are recording significant churn, meaning the subscriber dropout rate is alarming. Before the pandemic, churn was about 20% but jumped to 37% from October 2020 to February 2021 with majority of new subscribers cancelling their new services once the free trial period ends (30 days for Netflix). Netflix bulls are still optimistic, however. The King of Streaming hasn’t lost its spot just yet.
Disney (NYSE:DIS) is another contender in the subscription race. Launched just last year, the streaming service already has over 100 million subscribers. Even Goldman Sachs banking on a continued streaming boom as people continue to stay at home amid the pandemic, and the bank thinks that everyone has underestimated Disney+ so far--especially in light of its launch of DTC (direct-to-consumer) streaming.
"We believe Disney's best-in-class brand, global distribution (breadth), production assets (build), sizable content library (backlist) and strong financial profile (balance sheet) position the company to build scaled DTC video platforms in the highly competitive streaming environment," Goldman analyst Brett Feldman said in a note to clients.
And the numbers do look good: Goldman originally estimated that Disney+ will have over 150 million customers by the end of 2025, and its analysts think they are being “conservative” with this figure. And they’re right. With its current numbers, Disney+ is already on track to be a heavy competitor in this exciting industry.
Amazon (NASDAQ:AMZN) is another player in the booming subscription business. Its Amazon Prime is one of the leaders in the industry. Not only does it allow users to access a variety of content, it includes a members-only delivery bonus that will add next day, and in some cases, same day deliveries for free.
And Amazon is ESG-friendly, as well. Not only is Amazon looking to power its own operations with renewable energy, it’s also aiming to transform its own supply chain. From sustainable packaging and ethical and responsible sourcing, Amazon is going above and beyond to make sure it is setting a positive example for the entire market.
In a statement on its website Amazon noted, “We believe supply chain transparency is crucial to our approach to human rights due diligence and ensuring worker protections. We publish our supplier list to provide customers and external stakeholders visibility into where we source and to contribute to transparency efforts across industries. When we receive information about potential issues in our supply chain, we investigate and take appropriate action to remediate.”
Another subscription-based that has skyrocketed in popularity is the video conferencing application Zoom (NASDAQ:ZM). The app has become a major hit among companies that have implemented work-from-home policies to keep their employees safe and prevent the spread of the global COVID-19 pandemic.
Zoom's technology has revolutionized workplace communication, it provides videotelephony and online chat services through a cloud-based peer-to-peer software platform and is used for teleconferencing, telecommuting, distance education, and social relations. It's so huge that another startup is using the platform to connect celebrities with their fans (for a nominal fee). The app has become so popular, in fact, that it has even been featured in popular television shows such as Saturday Night Live. In fact, a number of TV personalities are doing entire shows using the application.
It has ripped away the market share of Skype and even Google Hangouts…and it’s showing no signs of slowing. Despite a massive rollout of vaccines and more people heading back to the office, Zoom has remained resilient. And with a number of companies opting to give more workers the freedom to remain out of the office, it’s not likely to go away anytime soon.
Even electric car companies are forming their own subscription business models. Take Nio Limited (NYSE:NIO) for example. Nio Tesla’s largest competitor in China, has also started to offer a batteries-as-a-service concept, in which car buyers can ‘lease’ the battery of their vehicle and save as much as $10,000 on the price of a new vehicle, while also offering buyers the option to swap batteries after a few years of use. And that’s huge news in the lithium world, because it will mean give miners even greater incentive to sign deals with the battery innovator.
This could be huge for Nio, which is already making major moves. Just last fall, Nio revealed a pair of sedans that even the biggest Tesla die-hard would struggle to pass up. The vehicles, meant to compete with Tesla’s Model 3, could be just what the company needs to pull back control of its local market from Elon Musk’s electric vehicle giant.
Mogo Finance Technology Inc. (TSX:GO) is a new spin on unsecured credit, which is a burgeoning sub-segment of FinTech. Providing loan management, the ability to track spending, stress-free mortgages, and even credit score tracking, Mogo is at the forefront of an online movement to assist users with their financial needs.
Mogo’s software analyzes borrowers instantly and greatly reduces the traditionally cumbersome underwriting process for loans. It’s online-only, so there’s very low overhead and a ton of cash to spend on marketing. Labeled as “the Uber of finance” by CNBC, Mogo is definitely turning heads.
With increasing membership growth and revenue lines continuing to improve, and a platform which many banks have failed to offer, Mogo could well become an acquisition target in the near future.
Contagious Gaming Inc. (TSX:CNS.V) is a software developer that has developed many systems for the e-gaming markets. The company has created a remote sports betting system that allows for live in-play betting during sporting and esporting events. The company’s content and technology can be delivered as a fully integrated service across a single, modern customer platform or can be offered as standalone verticals.
ePlay Digital Inc. (CSE:EPY) creates technology that helps TV networks, esports teams and leagues and even venues cut through the noise to reach their target audience. The company brings together multiple platforms to create engagement across social media, traditional media, streaming, and more. With a team built from sports, esports, and gaming experts, ePlay knows the video game industry inside and out. That’s why they’ve secured partnerships with companies including Time Warner Cable, ESPN, Sony Pictures, AXS TV, Intel, AXN, Fiat, CBS, Cineplex, and others.
Shaw Communications Inc. (TSX:SJR) is major player in the Canadian telecoms sector. It owns a ton of infrastructure throughout Canada and its cloud services and open-source projects look to address some of the biggest issues that its customers might face before the customers even face them. As online gaming depends on solid internet connections, Shaw will likely become a backdoor benefactor in increased online activity. Not only that, it’s growing higher on ESG investors’ lists, as well, thanks to its forward-thinking approach to the environment and its governance.
Another way to gain exposure to the electric vehicle industry is through AutoCanada (TSX:ACQ), a company that operates auto-dealerships through Canada. The company carries a wide variety of new and used vehicles and has all types of financial options available to fit the needs of any consumer. While sales have slumped this year due to the COVID-19 pandemic, AutoCanada will likely see a rebound as both buying power and the demand for electric vehicles increases. As more new exciting EVs hit the market, AutoCanada will surely be able to ride the wave.
By. Lawrence Stephenson
