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Recurly is a Business Reporter client
Subscription businesses face a slate of new challenges in 2025. The keys to success? Adaptability, flexibility, and creating value.
The subscription economy is worth a staggering $3 trillion annually, powered by millions of subscribers to products and services worldwide. That includes a panoply of subscription types, from streaming and entertainment services to digital newsletters, which have helped grow the overall subscription economy in recent years.
Consumers have been accommodating too. The average US consumer spends around $219 a month on subscriptions, totalling roughly $2,600 annually. But given consumers have had their fair share of challenges over the past five years – including a pandemic, subsequent inflation and, even more recently, economic uncertainty caused by trade wars and tariffs – they may now be hitting a breaking point.
Recurly’s 2025 State of Subscriptions report, which analysed data from more than 2,200 merchants and 67 million subscribers across all industries, found that acquisition rates fell 1.3 per cent year-over-year to 2.8 per cent. Conversion-to-trial rates also hit 33 per cent, a decline of 13 per cent. Particularly noteworthy for business leaders is that fraud-based declines – when a transaction is rejected by a fraud-detection system flagging it as suspicious – increased by 29 per cent. As consumers are retooling their budgets for the potential of additional price increases this year, many of them may look to cancel subscriptions to save money.
For subscription businesses, that’s an alarming prospect. Those businesses are already facing increased costs, the potential of some subscribers looking to cancel because of tighter budgets, and growing competition as new subscription services – such as AI assistants – enter the market.
“Subscription businesses are navigating a challenging economic environment in 2025, marked by global uncertainty and increased consumer scrutiny over spending,” says Priya Lakshminarayanan, Chief Product Officer at Recurly. “Consumers closely track their subscription spending and quickly cancel those that do not deliver clear, ongoing value. The companies thriving in this climate are those who showcase continuous value throughout the customer journey.”
As such, strategies are shifting to focus on subscriber retention. The good news is that new technologies, products and services can help companies get a handle on what may be a banner year for churn.
That may be as simple as offering subscription “pause” features. Industry data shows that allowing subscribers to temporarily suspend their subscriptions rather than cancelling them retains more than half of customers. During 2024, subscription pause usage increased 68 per cent year-over-year across industries, and 330 per cent in the digital media and entertainment category alone.
“Today’s subscribers view their relationships with brands as fluid rather than fixed,” says Lakshminarayanan. “Businesses must rethink their payment strategies – moving from rigid billing cycles to flexible, pause-friendly models. This includes embedding pause functionality at every cancellation point and using predictive analytics to re-engage paused users with personalised incentives. Businesses who think of pauses as a proactive retention tool will tend to do better.”
Offering flexible payments, too, helps retain subscribers. That can mean beefing up platforms with payment provider integrations, so that subscribers can easily connect their PayPal, Stripe or other accounts to make payments. This caters to different customer needs and preferences around the world.
After all, if business leaders can find ways to remove friction from the process, they’re more likely to retain subscribers and customers. Offering different payment plans – be it buy now, pay later options, adapting payment models across channels, or others – was one tactic many businesses tested out through the pandemic.
Further, subscription businesses may want to consider investing in AI to see how it can help scale their operations. There are billions, if not trillions, of data points out there, and harnessing them to help a subscription business isn’t easy. But by using AI, business leaders can generate specific, personalised insights into market trends, subscriber preferences and even potential risks or anomalies.
There’s also the potential to introduce enterprise-grade subscription management integrations, which foster customer loyalty and generate more value from subscriptions, both for businesses and for subscribers themselves. That may open up additional revenue streams and further solidify the relationship between brands and subscribers.
Loyalty programs can also be incredibly beneficial. According to Recurly’s report, 70 per cent of subscribers would reconsider cancelling a service if loyalty incentives such as discounts were offered. Personalised experiences also make a big impact. For example, Warby Parker’s Home Try-On program builds authentic, personalised connections, while Mailchimp’s “freemium” model supports personalised onboarding and customer support.
“Looking ahead to the rest of 2025, subscription businesses must make bold, data-driven strategic shifts,” Lakshminarayanan explains. “They must leverage AI to tailor content, pricing and offers while providing flexible options to build loyalty. Businesses must also be prepared for subscription fatigue and serial churning by making it easy for former subscribers to return and being ready to pivot offerings or pricing to meet changing demands.”
There are no guarantees that any of these changes will be a silver bullet. But as subscription businesses turn their attention to retention strategies, they will and should be top of mind—particularly when the near-term future is so uncertain.
To find out more, visit www.recurly.com.
English (US) ·