Do you subscribe to Netflix or own a Labubu plush toy (or bought one for your kids)? The influence of Netflix is clearly pervasive now, thanks to its several blockbuster productions like the Korean-produced Squid Game. Meanwhile, Pop Mart’s Labubu is ubiquitous and sought by celebrities from K-pop BlackPink’s Lisa to David Beckham. But how does Netflix’s well-known subscription model relate to Labubu? The short answer is the Experience Economy, and we will dive deeper into that idea below.
The subscription model was successfully leveraged by Samsung and LG for their hardware businesses, moving beyond the traditional use in media and entertainment. The success was seen in both home appliances and consumer electronics. LG achieved more than one trillion Korean won (US$714.3 million) in global sales from its subscription programs in 1H25 for its white goods and PC products. Meanwhile, Samsung launched the “AI Subscription Club” and the “New Galaxy AI Subscription Club” in Korea. The former, which is designed for home appliances, PCs, and tablets, generated over 100 billion Korean won (US$71.4 million) in monthly revenue.
The latter, which is dedicated to smartphone products, was subscribed by one in five consumers who pre-ordered an unbundled Galaxy S25 series. Of those subscribers, 60% belonged to Gen Z and Millennials.
Admittedly, Samsung’s “New Galaxy AI Subscription Club” is not a traditional subscription program, but it serves a similar purpose, that is, prompting the users to return the used products. Here’s how it works. Consumers buy smartphones outright or with an installment plan, and they have the option to subscribe to the program with a monthly fee that ranges from 5,900 to 8,900 Korean won (US$4-$6). The program promises cash payment of 50% of the device’s reference price if consumers return their used smartphones after 12 months (40% if returning after 24 months). The subscription program also includes various perks such as repair services, accessories, and discounts from Samsung’s cooperating partners.
Despite its non-traditional attribute as a subscription program, Samsung correctly tapped into the opportunities of the Experience Economy, where consumers are shifting away from ownership and valuing experiences over the practical benefits of products. By paying less than 9,000 Korean won (US$6) per month, consumers can look forward to an “upgraded experience” with a new smartphone in one or two years, with the purchase price reduced by the promised cash payment for their used devices.
“Samsung’s New Galaxy AI Subscription Club allows consumers to return their smartphones for a promised cash payment. This blurs the concept of ownership by gradually building a habit of returning used devices, a practice to which consumers are increasingly adapting,” said Jihae Kang, research analyst for Client Devices at IDC Korea. “Experience Economy tells us that product ownership no longer assures high customer satisfaction. Instead, customers place greater value on the memories or feelings a product offers. Ultimately, this strengthens the shift toward experience-driven consumption.”
To be sure, many financing plans also make new smartphones more affordable by letting consumers pay in instalments over as long as 36 months. This raises the question: what are the differences between financing plans and subscription models? From the smartphone OEMs’ perspective, the benefit of a subscription is to shorten the replacement cycles by prompting subscribers to replace their phones earlier. A good way to illustrate it is to take an example of a 24-month financing plan and a 3-year smartphone replacement cycle. The user may continue to hold the device after paying off the instalments. Nevertheless, Samsung’s subscription programs will encourage a phone replacement in one or two years as users return the devices for the promised cash payment.
Furthermore, for consumers, it could be mentally easier for some of them to get a subscription instead of another “loan,” especially if they are already burdened by a mortgage and/or car debt.
In the increasingly saturated and highly competitive smartphone market, building brand loyalty has never been more crucial. What a subscription program could also potentially achieve is to help keep consumers excited by ensuring they have first-hand experience with the latest products and technology in a shorter cycle. Essentially, it’s about constantly offering emotional value, which is what consumers are seeking nowadays and which shapes the fundamentals of the Experience Economy.
Labubu and Chiikawa are two key examples of the significance of emotional value. Labubu has become a global craze and helped drive the Pop Mart’s revenue with a triple-digit growth rate YoY in 1H25. In Japan, Chiikawa – a character from a web manga series – has the moniker of “our company’s savior” as it boosted the local sales of companies like McDonald’s and 7-Eleven by featuring the figure with their products.
Therefore, the ultimate goal is to create the “Labubu effect,” which keeps the excitement among consumers and, in turn, leads to stronger customer stickiness and ideally creates a word-of-mouth effect or social buzz. And the subscription model could be used as a tactic to ensure consumers personally experience the latest products instead of only being flooded with information from social media or news sites.
“The typical 3- to 4-year smartphone replacement cycles are creating challenges for the smartphone OEMs,” said Will Wong, senior research manager for Client Devices at IDC Asia/Pacific. “It’s not only about selling fewer devices, but it’s also hard to keep users captivated.”
Of course, it won’t be an easy task to initiate the subscription model, especially since it changes the business model and probably the cash flow timing. Nevertheless, the favorable uptake of Samsung’s subscription programs indicates a positive potential beyond Korea, especially since economic challenges are turning global consumers into value seekers and prompting them to seek comfort and excitement (i.e., emotional value). Furthermore, the smartphone OEMs could generate hardware revenue as long as the subscribers are using the devices, which optimizes the predictability of earnings and customer lifetime value. And the most compelling potential is its long-term effect in bringing the technology excitement to the users and ultimately creating the “Labubu effect.”
