“This world's not going to change unless we're willing to change ourselves.” - Rigoberta Menchú (Guatemalan Nobel Peace Prize laureate)
May 9, End Of Day
The subscription economy refers to a business model where customers pay a recurring fee at regular intervals to access a product or service. This model is increasingly important in Latin America due to its ability to provide stable, predictable revenue streams for companies and enhanced convenience for consumers. The Stripe report predicts that the market nearly doubles in next three years.
As technology advances and consumer behaviors shift towards more personalized and hassle-free solutions, the subscription model is becoming a dominant strategy across various sectors like media, software, and transportation. In Latin America, this trend is further driven by the growing accessibility to digital payments and an expanding middle class seeking new consumption patterns.
1. Growth Driven by Pandemic and Digital Transformation: The subscription economy in Latin America saw a significant boost during the COVID-19 pandemic, registering a growth of 30% in 2020 and 2021. This growth is attributed to the accelerated digital transformation in the region, making it easier for consumers to access subscription services.
2. Predicted Market Growth: The subscription economy in Latin America is expected to reach $20 billion in 2023 and is projected to nearly double by 2026. The drivers of this growth include digital acceleration, increased credit card access, and shifts in consumer preferences.
3. Market Segmentation and Evolution: The report segments the subscription industry into three main sectors:
- Consolidated sectors: Include media, digital services, and software, which currently generate most revenues.
- Growing sectors: Include retail, gaming, education, and healthcare, where traditional models are still prevalent but are gradually shifting towards subscription models.
- Emerging sectors: Include business services, mobility, tech devices, and hospitality, exploring innovative recurring models.
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Talo Pay Inc.: Talo Payments is specializing in crypto payments infrastructure for businesses. They have reached 150 new customers in Q4 2024 and achieved a 50% month-over-month revenue growth since launching their Tiendanube Integration. Get to know the case here.
Dive deeper into other fundraising firms in LatAm here.
Colombia: Colombia's state-controlled oil company, Ecopetrol, is considering participating directly in the country's first offshore wind auction, aiming to diversify into renewable energy. The government requires bidders to partner with public or mixed-ownership entities, a criteria Ecopetrol could meet. The company is currently evaluating its potential role and exploring partnerships for developing offshore wind projects, aligning with broader national goals to reduce reliance on fossil fuels.
Paraguay: Paraguay is negotiating a $1.5 billion gas pipeline project to connect with Argentina and Brazil, offering an alternative to a similar Bolivian proposal. This initiative aims to utilize gas from Argentina's Vaca Muerta region and would run through Paraguay's Chaco to Brazil. The project, which could cost up to $1.5 billion with private sector participation, has gained preliminary support, with plans for a formal agreement by June.
Panama: Jose Raul Mulino, Panama's new President-elect, has vowed to govern effectively and independently, despite being a late replacement for the disqualified Ricardo Martinelli. Known for his stern approach as a former security minister, Mulino promised economic growth and social projects like a public pet hospital and a major train line. He emphasized his commitment to uniting the country and moving beyond past political conflicts.
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