In its latest industry analysis, RevenueCat, a provider of subscription management for mobile applications, has published its annual “State of Subscription Apps 2024” report, providing a comprehensive overview of current trends and performance metrics across the mobile app subscription sector. The report compiles data from 30,000 apps utilizing RevenueCat’s SDKs, representing a cross-section of the mobile subscription landscape.
Key findings from the report underscore the ongoing challenges and opportunities within the mobile app subscription market. Subscription apps need to navigate carefully through pricing, retention strategies, geographical targeting, and the integration of new technologies like AI to sustain growth and profitability. Additionally, understanding the reasons behind subscription cancellations and reactivation trends can provide crucial insights for improving user retention and overall revenue.
“In the last 5 years we’ve seen dramatic changes to our industry: pandemics, the 2021 bubble, privacy changes, antitrust cases. Shifts that have completely remade how we do business on the app stores, and yet, these businesses continue to grow. 2023 was a year of renormalization and reacceleration where we saw the businesses who survived the post-covid era really begin to thrive.’
— Jacob Eiting, CEO & Co-Founder, RevenueCat
The most significant learnings and marketing trends from the 120-page RevenueCat “State of Subscription Apps 2024” report can be distilled into several key points:
- Conversion and Pricing Adjustments: While the conversion from downloads to subscribers shows a modest improvement to 1.7%, the gap between the highest and lowest-performing apps remains stark. Despite stable pricing points, there’s a notable rise in the average monthly subscription cost, indicating a strategic shift towards higher pricing models.
- Retention Realities: The data indicates a 14% dip in the 12-month subscriber retention rates, signaling a growing challenge in maintaining a loyal user base, likely aggravated by increasing subscription fatigue and price sensitivity among consumers.
- LTV Variations by Region: The disparity in Realized Lifetime Value (LTV) between North American users and the global average highlights the potential for region-specific marketing strategies to enhance profitability.
- AI’s Emerging Role: The report emphasizes the transformative role of large language models (LLMs) and generative AI, with Eiting suggesting that mobile remains the central platform for these technologies, urging subscription apps to leverage AI for enhanced offerings.
- Navigating Subscription Fatigue: As users become increasingly wary of multiple subscriptions, apps must find a balance in pricing and value proposition to mitigate churn rates.
- Revenue Discrepancies and Growth Opportunities: The stark revenue gap between the top 5% of apps and the rest underlines the critical importance of market differentiation and solid marketing strategies. Furthermore, the gradual adoption of alternative revenue streams like in-app purchases and affiliate marketing is emerging as a trend to watch.
The findings have sparked discussions across the tech industry, with reports from Apple Insider, Ars Technica, MacRumors, TechCrunch, Gearrice, and others focusing on the increasing difficulty for subscription apps to achieve significant monthly revenues. Most apps reportedly fail to surpass the $1,000 monthly revenue mark, highlighting the market’s competitive nature and the challenges developers face in achieving financial sustainability.
INSIDER TAKE
The RevenueCat data offers a glimpse into the dynamic landscape of the subscription app market, a realm where only a select few achieve significant success while the vast majority of app developers grapple with revenue generation.
Yet, despite these revenue discrepancies and the prevalent challenges of subscriber churn and increasing ‘subscription fatigue,’ the subscription model remains a cornerstone for app developers’ revenue strategies.
One important point to leave you with: we are not yet seeing a discussion on the responsibility of App Stores, like Apple with its new contingent pricing strategy, to innovate and extend more robust support to developers. This approach is crucial for navigating the prevailing market challenges and facilitating a more equitable distribution of success across developers.
