Subscription Features Offer Revenue Opportunities

By Staff Writer May 22, 2023

According to consumer research from Cox Automotive, automakers may face challenges if they expect to generate significant revenue from subscription-type features, also known as Features on Demand (FoD).  

In a new study titled “Software Monetization: The Emergence of Vehicle Features on Demand,” the Cox Automotive Research and Market Intelligence team explores the trend toward offering vehicle features through subscription-type services.

The Cox Automotive research indicates that FoD with the greatest revenue opportunity for the automakers would be stolen vehicle location and recovery systems, parking-assist features, digital keys via smartphone applications, and in-vehicle Wi-Fi. According to the new report, the greatest longer-term revenue opportunities for FoD would be through streaming services, virtual assistants, and driver monitoring or self-driving capabilities. “Our initial research indicates that the transition to Features on Demand will be an uphill battle for many automakers,” said Vanessa Ton, senior manager of market and customer research at Cox Automotive, who helped lead the research project. “In the market right now, there is low consumer awareness and some skepticism on the part of shoppers. To gain consumer acceptance, automakers must ensure consumers perceive subscription-based features as a good value and not just a money-grab.”

The study revealed areas automakers should address when developing a Features on Demand strategy.

  1. Low awareness: The study suggests that understanding of Features on Demand is still very low among shoppers, with only 21% of in-market shoppers familiar with the concept. However, 41% indicate that they are interested in Features on Demand.
  2. Perceived high price: The research also shows that, at least initially, most shoppers (58%) expect an FoD approach to be too expensive, and there are concerns about data security and privacy.
  3. Free trial periods: Sixty-five percent of survey respondents suggested that a free on-demand subscription – a free-trial period – would be a positive selling point and make them more likely to consider a brand.
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Last modified on Friday, 26 May 2023 11:40