Subscription stress sets in as consumers burdened by monthly memberships

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Subscription stress sets in as consumers burdened by monthly memberships

Published: 08 Oct. 2024, 07:00

CHO YONG-JUN
cho.yongjun1@joongang.co.kr

Starbucks store in central Seoul [NEWS1]

From movie and music streaming services to e-commerce sites like Coupang and coffee chains like Starbucks — consumers are overloaded with monthly subscription services. With more choices entering the market and tougher economic times, some consumers are thinking again about continuing their memberships.

Monthly subscriptions are advertised to provide financial benefits to consumers that frequently use the service. A Netflix standard monthly subscription, priced at 13,500 won ($10.12), is similarly priced to a cinema ticket but offers unlimited streaming. A Coupang WOW membership at 7,890 won roughly equates to the average delivery fees of two product orders and also provides access to the company's streaming service.

The recurring plans also aim to lock in consumers, luring them into using a company's services more. But the increase in the number of subscription services, on top of the price increases on individual plans, can result in consumers feeling overwhelmed altogether.

“I subscribed to the Coupang WOW membership because I was attracted to its Rocket Delivery service,” an office worker surnamed Kang living in Eunpyeong District, northern Seoul, said. "But I ended up canceling it after they increased the subscription cost.”

Kang said he set a 40,000 won limit on his combined monthly subscription spending, which resulted him canceling Coupang WOW in August when the membership price increased from 4,990 won to 7,890 won.

“I stream music through YouTube Premium and watch videos on Netflix, but those combined together is pricey, and now I’m considering which one to cancel now,” he said, adding that while he currently is subscribed to Baedal Minjok’s monthly trial pass, he’d likely cancel it when the trial period ends.

Monthly coffee subscriptions

Starbucks Korea became the latest player in the subscription game after introducing the Buddy Pass.

Introduced in late September, the Buddy Pass comes with one 30 percent discount coupon per day, only available to use after 2 p.m. on non-bottled drinks. The service also offers one discount coupon per month for food, along with one free delivery coupon and two online store delivery coupons. The 9,900 won per month subscription pass will operate until the end of the year, in a testing phase.

Coffee Bean Korea also launched a yearly membership for a limited amount of time last October. Titled Aurora Members, the 30,000 won subscription provided users with a 10 percent discount on all items sold at the cafe and came with a drink coupon as a birthday gift.

Coffee franchises’ subscription services have emerged as the result of tight competition and as a way of locking in existing customers while also attracting new ones.

“The coffee market in Korea was already oversaturated, and the popularization of budget coffee franchises made the competition even steeper,” a franchise coffee insider said. “That’s why the coffee franchises are looking into solutions to retain their customers, like with subscription services."

All three major food delivery platforms — Baedal Minjok, Yogiyo and Coupang Eats — have subscription services in some form or another. Baedal Minjok’s Baemin Club, which had its official launch in September at 3,990 won a month, provides free delivery for its basic delivery service and a discount when using the faster delivery option. Yogiyo offers a similar deal for 2,900 won, while Coupang Eats’ free delivery perk is included in the Coupang WOW subscription.

Overloaded with subscriptions

The new subscription services and the price increases for existing ones are burdening consumers. Coupang raised its WOW membership price from 4,990 won to 7,890 won and major video streaming platforms, Tving, YouTube Premium and Disney+ have upped their monthly prices by between 22 percent and 42 percent.

“The cost of subscription services was a burden, but the thought of making my monthly price worth the money made me waste way too much time watching videos,” Lee, a 29-year-old officer worker who canceled all their streaming subscriptions earlier this year, said. “Choosing what to watch became a stressful event.”

Koreans on average are subscribed to, on average, 3.4 services and spend around 39,963 won a month on subscriptions, according to research done by payment service provider Bango in October. At the same time, 62 percent answered that they couldn't afford all the services they wanted, and 42 percent canceled subscription services due to the price increases.

“Companies prefer subscription services because they can secure a constant flow of income, and they are also able to promote additionally to existing subscribers,” consumer science professor at Inha University Lee Eun-hee said. “It results in an overall decrease in disposable income for consumers, as they end up paying a constant fee, regardless of the usage of the subscription.

BY OH SAM-GWON [cho.yongjun1@joongang.co.kr]