In this episode, we mark the release of the 2024 edition of RevenueCat’s annual State of Subscription Apps report with a discussion where we go over the numbers. And, hopefully, answer the question: what is the current state of subscription apps?
Not to spoil the episode for you but to sum it up the state of subscription apps looks… good. Great, even!
The backdrop to this report are a number of tumultuous years for the app industry (and not only). The pandemic changed the app business - and corresponding consumer behavior‚ overnight; antitrust cases with Apple and Google, combined with country-specific regulatory changes, have been slowly rewriting the rules of the app stores; and even the ways that apps can drive new users have changed as a result of privacy updates with iOS 14.
Despite these (and other) events, apps are still here… and they’re continuing to grow.
Key insights:
👨🏼‍🔬How to use these benchmarks
Don’t view the report's benchmarks as rigid rules - the data is highly dependent on context - but as a strategic tool for identifying opportunities for growth and areas for improvement. Above all else, the data should encourage you to experiment to find what works best for your app.
📈There’s room to optimize your conversion rates
With an average conversion rate of 1.7% from downloads to paying subscribers in the first 30 days, the disparity between the top and bottom quartiles (4.2% vs. 0.6%) underscores significant room for conversion optimization. Notably, conversions are higher in North America, suggesting the need for targeted price testing to optimize conversion rates across different markets.
🗓️Your first year not go off with a bang? Try and try again
A year post-launch, the top 5% of apps generate over 200 times more revenue than the bottom quartile. This discrepancy highlights not just the potential for significant earnings among the leading apps but also underscores the reality that many projects may simply not work out. If your app isn't gaining the traction or revenue you hoped for within its first year, it might be time to consider pivoting to a new project or strategy rather than doubling down on an underperforming one.
🗺️Be strategic with your platform and regional focus
North America's app revenue significantly outpaces the global average, with an average Realized LTV per download four times higher. However, South Korea and Japan also show strong monetization, especially on Google Play. Additionally, large markets like India, despite lower averages, might offer hidden opportunities. Apps need to strategically choose where to concentrate their focus based on what they know about their customers - sometimes a multi-platform strategy might make more sense before localization.
💲Retention challenges
Last year saw a notable 14% drop in the retention of monthly subscribers across categories, with all performers feeling the impact. In a landscape where aggressive acquisition and monetization strategies may attract lower-intent users, the real challenge lies in nurturing and retaining those genuinely valuing the service. As subscriptions continue to compete for user attention, it becomes essential to discern between fleeting "tourists" and dedicated "locals" - the loyal users. Apps must prove their unique value, compelling users to stay.
📱Reactivation potential, but small apps best focus elsewhere
Over 10% of churned monthly subscribers resubscribe within 12 months, with certain categories like Media & Entertainment seeing even higher reactivation rates. This reveals a compelling opportunity for apps to win back subscribers, especially as the pool of churned users grows over time, potentially making reactivation efforts more impactful. However, for newer or smaller apps, focusing on acquisition and initial retention is going to be more beneficial than win-back campaigns.
Links & Resources
Check out RevenueCat online - www.revenuecat.com
Episode Highlights
[1:31] Weathering the storm: After several years of turmoil in the subscription app industry, things finally started to settle down in 2023 - and app businesses are thriving.
[7:12] The business of intelligence: AI technology leapt forward in 2023, and mobile AI apps saw big wins.
[14:07] Stop guessing, start acting: The benchmarks in the 2023 State of Subscription Apps report can help you make data-driven strategic decisions.
[17:37] The state of the (app) union: Five key takeaways from the report that identify industry trends, potential pitfalls, and emerging opportunities.
[38:44] First impressions matter: Most trial starts occur within 24 hours, so make sure your user onboarding experience is compelling.
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