LG to offer subscriptions for appliances and televisions
Subscription fatigue is a thing and regulators are circling, but Korean giant reckons you're ready to cough up after buying hardware
LG Electronics has outlined its ambition to grow revenue from $51 billion company to $78 billion over the next six and a half years, thanks in part to ads streamed to its tellies and subscription services for its appliances.
“LG will innovate with a platform-based service business model that continuously generates profits, such as content and services, subscriptions and solutions, to the hardware-oriented businesses, which generate sales and profits at the time of purchase,” the company said on Wednesday.
LG called this a “customer engagement” centered business model that relies on appliances already present in customers' homes, such as 200-million strong fleet of its smart TVS currently already in use. Those tellies, including the premium end OLED and QNED TVs, will soon have content, services and product ads expanded in an attempt to turn the company into a media and entertainment service provider.
LG has already offered a taste of its intentions: in 2022 it revealed a scheme called “Evolving Appliances For You" that promised software upgrades to home appliances. The company offered the example of a family that moves to a different home, and different climate, and upgrades its clothes drier with routines suited to local conditions.
The entrance to subscription media comprises part of what CEO William Cho described on Wednesday as a transformation for LG to a “smart life solutions company,” a goal he’s hoping to hit by 2030.
LG's subscription-fueled growth plan comes amid an explosion in such services. IBM found 300 percent growth in subscriptions in the decade to 2022.
But there are also signs consumers are tiring of subscriptions: the term "subscription fatigue" has emerged to describe the frustration consumers feel when their credit card statements reveal growing numbers of monthly membership payments.
Regulators have also noticed some sharp subscription practices, especially deterrents to cancellation. The US Federal Trade Commission (FTC) recently considered stronger regulations of the business model.
- You're too dumb to use click-to-cancel, Big Biz says with straight face
- LG debuts thin malleable screens made from contact lens material
- LG promises to make home appliance software upgradeable to take on new tasks
- LG makes a TV roughly the size of a queen-sized bed
LG is undeterred by such controversies. And seemingly also unworried that punters might push back. But tally-ho, revenues must significantly increase, despite 2022 pulling in LG’s highest annual revenue ever. LG attributed that success to “strong demand for premium home appliances and automotive parts.”
There’s only so many premium home appliance a company can sell, it seems, so LG is intent on trying to capitalize on that market in a different way.
It also wants to turn its electric vehicle business into a component part provider worth more than $20.9 billion by 2030, which it seems confident it can do given it expects its backlog in its vehicle components unit to reach $104.5 billion by the end of the year.
LG's strategy announcement comes after it “boldly” exited its loss-making mobile phone and solar panel business to “focus on future high-growth areas.” ®