The subscription business model, once exclusive to the rental industry, is rapidly spreading into the manufacturing sector. As subscription-type models gain traction in manufacturing fields such as agricultural machinery, office furniture, and boilers, companies are shifting their competitive focus toward securing "lifelong customers."
According to industry sources on the 28th, the number of subscribers to Daedong's AI agricultural platform, "Daedong Connect," surpassed 50,000 last month. Daedong is advancing its subscription business model that automatically updates agricultural machinery and provides precision agriculture services based on data accumulated through remote control systems. Its goal is to achieve an annual recurring revenue (ARR) of 103.2 billion won by 2030.
Subscription-type business models are spreading rapidly to other manufacturing sectors. Pasis introduced office furniture rental services for the first time in the furniture industry earlier this month, aiming to create a new revenue model in a saturated market by targeting startups and shared offices that face high initial cost burdens. Boiler manufacturers such as Kyungdong Navien and Gwitullemi are also expanding boiler and hot water mat subscription services that combine regular inspections, filter replacements, and after-sales service (AS).
These changes demonstrate that manufacturing business models are evolving into "Manufacturing-as-a-Service" (XaaS). This approach combines product sales with maintenance, software updates, and data to provide continuous management and support even after the sale.
The reason companies are focusing on subscriptions is that growth has become clearly limited by product sales alone. As technological advancements have extended product lifespans and lengthened replacement cycles, coupled with economic slowdowns and market saturation, stable cash flow has become crucial. Another advantage is the ability to utilize accumulated customer data for improving product performance and developing new services.
The investment industry also views recurring revenue businesses positively. They are seen as favorable for profitability improvements because they offer high predictability of earnings even amid economic fluctuations and incur lower costs to retain existing customers than to acquire new ones. According to the KT Economic Management Research Institute, the domestic subscription economy market size is estimated to have grown from approximately 25 trillion won in 2016 to surpassing 100 trillion won recently.
As manufacturing companies continue to enter the subscription market, competition in the existing rental industry has also intensified. The focus is shifting toward acquiring new accounts and increasing subscription retention rates. Coway and SK Intellics are expanding products for single-person households such as food waste disposers and pet appliances while establishing rental models overseas to increase their user base.
Coway's total rental accounts increased by approximately 39%, from 8.45 million in 2021 to 11.73 million in the first quarter of this year. During the same period, its overseas accounts grew by about 74%, rising from 2.44 million to 4.25 million. SK Intellics also expanded its total account count from 2.05 million to 2.35 million over the past five years. Recently, it strengthened its service competitiveness by equipping its wellness AI robot "Namu X" with security software.
However, critics point out that subscription models have limitations: initial lump-sum sales decline in the early stages of business, slowing cash recovery, while maintenance and customer management costs continue to accumulate steadily. There are also numerous cases where consumers express "subscription fatigue." In fact, Hanssem entered the home furniture rental market in 2019 but failed to establish itself and terminated the business in 2022.
An industry official stated, "Competition in the manufacturing sector is shifting from how many products are sold to how long customers can be retained," adding, "Companies that provide both products and services while managing customer experience will determine competitiveness."
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