# The Future of Subscription Apps (Why We’re So Excited For 2024)

Channel: Sub Club by RevenueCat
Video: https://www.youtube.com/watch?v=uo5EjSoQhUg
Duration: 42 min
Language: English
Words: 8884
Transcript page: https://viewrankai.com/tools/youtube-transcript/uo5EjSoQhUg

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[0:00] hello I'm your host David Barnard and with me today Revenue cat CEO Jacob iding on the podcast we talk about Revenue cats 2024 state of subscription apps report the state of the app industry more broadly and why a slight drop in renewals in 20123 isn't as bad as it might seem hey Jacob ready to talk ciles medians and lots and lots of numbers today I am now you didn't tell me we're to talk ciles and medians today Davis my favorite subject especially as it pertains to applications on phones so let's go so we're about to release the 2024 state of subscription apps report and as is now the tradition year two you

[0:42] and I just you and I get to go with the numbers together this what it takes for us to get some one-on-one time David we have to release an entire state of subscription apps report I've gotten muscled off of this podcast for all the great guests but I'll take what I can get so I'm excited to talk today I try and get you on with the guests that I think would be most interesting for you to I appreciate that I apprciate that all right so in the first few slides of the stateus subscription apps report there is a great letter from the CEO that you wrote and I thought it was so

[1:11] good I actually wanted to kick off the podcast with this because I do think it's important before we dive into the numbers to talk about the meta around subscription apps and if I were to sum it up the state of subscription apps in 2024 is good great you're going well least yeah the first thing you talked about was that we have been through a tumultuous few years yeah I mean if you just think about it Revenue cat's been really doing our thing since 2018 2019 and if you cast backwards to that world to where we are now a lot has happened in just about every Dimension the

[1:48] pandemic changed placement of our businesses overnight and some of that has reverted but not everything has reverted I don't think we've gone back to the way it was certainly from an industry's perspective the apps just became much more important it changed consumer Behavior forever but then also it created this immense monetary bubble during 2020 and 2021 that had aftershocks that lasted clear through 2022 and if anything we talk about why I think 2023 was a better year is that 23 year was the first year we were kind of clear of most of that it was still a little bit happening the beginning of 2023 but really felt like the first year

[2:19] that things had sort of resettled and renormalized and then alongside that we've had all kinds of crazy side shows that have gone on there's been all this antitrust stuff with Apple and Google as well as like their regulatory issues in different countries and app tracking transparency yeah and then that was the other one I was going to mention like apple basically turned on its head going acquisition strategy for apps in that time period so yeah a lot of that stuff all kind of happened between 2019 and 2022 so by 2023 I think we were really finally set up to kind of have a quote unquote normal year for apps if anything

[2:53] I think we learned is that apps are still here they're still growing we have a different set of sort of winners in 2023 as you will and like a a very Dynamic Market but yeah and if anything it's got me more bullish for this whole industry because yeah we can kind of survive figure it out we can renormalize and you know in some cases we accelerate I'll say from our business we certainly have benefited in the last year from customers growing but as well as maybe some new trends and then also just the relative stability of the global macroeconomic condition which bitcoin's up 25% in the last 30 days as we're

[3:24] recording this which doesn't tend anything positive so maybe this is very untimely by the time this is released but so far so good into the first couple months of 2024 one of the things that does excite me about how strong 2023 was is that it wasn't until the louder part of 2023 that I started hearing from a lot of people in Industry that the app tracking transparency stuff had started to renormalize like meta is finally finding its footing really toward the end of 2023 and that was such a huge driver of growth for Ops as being able to buy everybody blames The Meta collapse and rebirth on zuck's over

[4:04] focus on like the metaverse and things like this but I think probably as much if not most of it can be attributed to at right yeah yeah and so I'm excited coming into 2024 that it has been getting easier and easier like it was preat to find those users who are going to be profitable and so I think that's kind of what we're seeing like you said it's like apps in 2023 were thriving and I think it wasn't just like year-over-year that 202 2 was an easy beat seem to have a good year when you're lapping a bad year right yeah but I do feel like there's wind in the sales

[4:36] again for the first time in a few years with things being better the other thing I wanted to bring up before we kind of move on to some of the other things you mentioned and you didn't mention this specifically in your opening letter but it's something I think about a ton I feel like I'm always seeing articles like subscription fatigue too many things are subscription and people are annoyed and how many more streaming services can you subscribe to but it's like we don't see that in our data anyway no I mean we don't have great share of spend per customer which actually may be something we could start

[5:07] to compute over time but I've always felt like subscription fatigue was just a convenient angle that was popular for clicks the economics of it never really shook out if anything apps and software have driven down the costs of the services they provide in the last decade and we were just talking before the call about streaming services as a specific example and sort of unbundling of cable in my head I was like God Cable's $100 a month right but if think about it that was $100 a month in 2008 right which is like a lot more today and I don't spend $100 a month on Hulu and Prime and

[5:37] whatever other streaming services I have that allow me to stay unbundled from cable and they're so much better things are probably going to change post zerp post zero interest times and studios are starting to cut back but if you think about the last few years we've had kind of the golden age of TV and movies struggled because of covid and box office but we're paying less then especially inflation adjusted we ever did for cable we're not seeing ads we're getting like the best content that's ever been created in human history I mean there's like tons of shows that I hear people talk about that I don't even

[6:11] have time to watch so it's like there's so much great stuff and I think that's kind of reflective more broadly of the subscription app industry is that developers are creating just so much value and creating more and more and more value and then that value is being captured in price I don't see why you couldn't take that analogy from streaming services cable to streaming services to kind of every other domain of mobile apps right you mentioned there's been some readjusting on the media company ecosystem there's been a lot of layoffs and things like this and potentially you know we're going to see less content being created but at the

[6:46] same time we have this Rising trend of generative AI tools I'm not a person who believes that you're going to type in and get your own custom movie in my lifetime or maybe in my lifetime but I don't think that something is around the corner but I do think that every creative professional whether they like it or not are going to be using AI tools for leverages whether that's in VFX or script writing or whatever which is further going to drive down the cost of producing content in media further going to increase the amount that you can get for the same dollar I talked about AI in

[7:13] the report even though it kind of felt like industry buzzwordy just to be shoving AI in there but we got to talk about it because llms I feel like open AI kind of really had their breakout year they released Chad gbt 3.5 the end of 2022 and then it really hit Commercial Appeal their app came out this year we also saw the of Google's attempts and like everybody else is getting their AI products out and I think what surprised me was that how much of a consumer Revolution it was like I kind of always assumed that this was going to be for back office stuff and models and things like this but

[7:42] turns out that a well-trained decent llm in your pocket is a pretty powerful tool that most people can get it became a consumer brand and not just chat gbt I mean consumers started using generative AI very very quickly and we've also seen AI get incorporated into app and so there's been takes on the internet which I don't think are wrong that potentially we're at the end of the mobile S curve right so if you can think about the transition to mobile that really has driven growth in technology I think at least on the consumer side for the last decade started in what 2008 2009 something like that 2013 2014 that's

[8:16] when Peak adoption was happening it was like the abss were ripping and there's no end in sight and then maybe around 2017 2018 we started to see the backside of more people had smartphones than didn't and things like this and that's LED some people to the conclusion that like the mobile Revolution is over right and it's like yeah probably like we've reached saturation there um Hardware in Hardware right and maybe the first Beach head of consumer behaviors but like think about the PC right like you could have drawn that adoption curve in the 90s for the PC or the internet but then if you actually map that to the value

[8:47] that was going to be generated by those Technologies those were purely exponential because every continuing advancement was built on top of those Technologies and used those Technologies so it wasn't purely replacing it now there may be a day and I constantly trying to like see if I can see around the corner here and predict will we see a fall of the mobile device in the App Store as it is and like I'll say that certainly in this year has given me more reason to pause and think about like the future of developers and apps and things like this when a computer can do a lot of it that it couldn't 18 months ago I

[9:18] won't say I know the future I just think it's gonna be interesting and there may be a future disruptive event for mobile but I really believe that the immediate value of these AI apps especially for consumers I won't name names but every time I'd see a big breakout app on the revenue cat internal dashboards and stuff this year it was almost always something AI like either a generative AI or an application of AI or adding llms to an existing use case and so I really think these Technologies are going to be linked just like the internet and Web 2.0 and social were just like social and

[9:46] mobile were as well like these Technologies kind of have interlocking behaviors so maybe I'm wrong and maybe this is just coat but I don't think the mobile Revolution is over so everybody can keep subscribing to the podcast keep investing keep downloading X code I think it's going to to pay off so I think it's worth pointing out and Diving a little deeper on how the scurve of adoption does not necessarily parallel any way you would chart value derived from that hardware and so for example like dishwasher adoption like when you see these historic adoption curves of new technology it's like once you've adopted a dishwasher the kind of value

[10:22] in your life is fairly set I mean for me I had more kids the more kids you have maybe the value goes up slightly but basically it's like car adoption you know electricity adoption and so much of like historic adoption of new technology there's kind of a cap on the amount of value you derive from it in your life like you adopt a car it's like you get my 2023 Tesla is nicer than my 95 cutless supreme but it's not transformatively different in how it changes my life you know what I mean yeah but then PC adoption to your point and then now smartphone adoption it's

[10:56] like we reached close enough to Peak the s-curve adoption decades ago for PC or not quite decades but both Technologies are very mature at this point but the value that you get from those Technologies has continued to increase like you said exponentially yeah it's cuz you're adding a bunch of s-curves together the true like acceleration curve of Technology over time is the summation of many many different S curves let's called a logistic curve added together and if you add them all together and you zoom out oh wow it's exponential but any one technology is going to have its impact and you know don't know where we draw the lines on

[11:30] like what is a technology versus nons you know when is a phone not a computer and when is a VR headset not a phone and all those things it's kind of arbitrary you know when you know like I think llms are a new curve that that is certainly I don't think anybody's going to debate that interacting with a talking computer is is not something novel and different and has actually utility but maybe people get a little too excited to say like Doom say about the end of Technologies and others which certainly happens right like it's not unheard of for one technology to be disrupted by another and that's why I said in terms

[12:00] of ai's application to mobile like there will be winners people will adopt it and win others will miss the boat and their products will be outdated but it's not necessarily a wholesale replacement and so it just got to be on your toes figure out how to integrate this stuff and and where are we experiencing the value derived from AI primarily on our devices yeah it's the mode of consumption right and for our customers it's dual because it's and this is maybe a little bit too behind the scenes but it's the value it can provide to our customers and user experience Revenue cat doesn't use a ton

[12:31] of AI in the product necessarily but like internally we use it a ton right like every developer we have is using co-pilot it has changed the way we can build stuff and how fast we can build stuff and I'm sure you don't need to be convinced to use technology that is useful so I don't have to here and chill like people will just use it if it is it just felt like the AI narrative and story this year is something we'll kind of remember as a transformative year and it certainly has an impact on our industry so I felt like it was worth mentioning I think a good summary of the

[13:01] 2024 report and we'll point out a few areas that did lag in 2023 compared to 2022 but it was just bigger stronger faster better A lot of good stuff happening yeah we can get into the report in terms of how we structured it this time we're throwing stuff at the wall here we just tried more charts twice as many charts if you add up the number of additional segments we added in data points it's probably way more than two times the amount of data it's probably four or five times the amount of data we'll see what the customer feedback is and see how people like and

[13:34] what they don't like but we've certainly enhanced our ability to process this data in the last year we went deeper and broader in a lot of areas with the same sort of mission as the first report which is to give you some real numbers you can kind of stick to when you're making decisions about strategy about pricing strategy or localization strategy I would say largely around go to market strategy for your apps but we tried to cover a pretty spanning set of data that will be interesting for you as you're making some educated guesses I like how you ended it stop guessing start acting what do you think is the

[14:08] best use of benchmarks for a company in the space like when you see these trial startart rates when you see the download to paid conversion rate when you see these numbers in the 2024 report like how does the average consumer subscription app look at these numbers and make better decisions based on it yeah I mean I think any given day as a business owner you're trying to just move the needle you're trying to grow your Revenue you're trying to make your app stickier you're trying to find better product Market fit which there's two sides of that there's the product and the market I would say this report

[14:43] leans on the market side of that it's like what parts of the market and pricing and things like that are relevant the way I always use benchmarks just a rough idea how's our trial conversion rate look is it in the median is it high is it low you know you shouldn't be working on the things that you're good at really you should probably be working on the things that you can stand to improve what's most important is to contextualize all the things you look at into your app like what are you doing that might be driving this number down compared to like 10 of your peers right and I think that's

[15:09] really important for every person consuming this data to do because if you just look at it and go like we should have x% trial conversion rate and it's like well maybe is your trial really expensive is it really short is your product experimental like there's going to be things that affect that none of this data you should be able to just take and put it as your okay RS for the year or whatever right I think you need to take it in and contextualize it but it should give you notional orders of magnitude ideas of like where to focus your time and energy and what experiments are worth trying because

[15:36] ultimately I think you should use this to drive experiments and try things you shouldn't use this as like the ground truth because every app is different the variance can be very high Within These parameters so everybody's got to try it but I think having rough numbers can be a starting point for a discussion on what we should try rather than an answer yeah one of the things I really do like about the extra data we put in this year and we'll talk about this in a few specific cases as we dig into the data but because we broke it down by country and broke it down by category like if

[16:05] your business that's looking to expand your portfolio of apps well you can look at the categories and see which categories are doing well if you're primarily us focused and you're thinking where do I localize first you can look at how different countries monetize there are a lot of places in the data to find opportunity this year yeah and even if you don't have an app yet it's also great if you're thinking about starting an app you know for instance I think one of our first data points is download to paid in South Korea for Education apps is over 10% which would probably be like top desile like you knew that right so

[16:37] right maybe that's a good idea starting with some Tailwinds that's another thing is like find your Tailwinds find the places you can go where it will be easy for you to succeed and don't waste time I see a lot of developers especially with localization is a really good one like developers will go super Broad and localize everywhere and bl or like focus on conversion in certain countries where it's just like you're never going to turn a dime focusing on conversion in that country like don't worry about it at your scale and I think this can be as much as a negative guide of where not to

[17:04] focus as it is where to focus right yeah and we'll get into it but it is interesting how the data confirms a lot of the biases in the industry like North America average realized LTV is just way higher than other countries and Maps pretty well to like price purchasing parody GDP per capita pretty well and it just Maps broadly to so many apps being more North American focused and those specific markets that do get a lot of focus like there's a reason people focus on the US as their primary market for apps is that it has the highest realiz LTV so anyways let's start with the five

[17:38] key takeaways and since those were the highlights of the report in the report itself I figured that would be the place to kind of dive in and talk through it so I'll just read them and then we can talk through the implications and what it means and all that so the first key takeaway is that 1.7% of downloads turned into paying subscribers in the first 30 days which is slightly up from last report the difference between lower quartile which is 0.6% and the upper quartile which is 4.2% remains striking a 7x spread right that's not even like top desile lowest desile right that's cortile so the top

[18:16] 25% of apps is seven times plus more than the bottom 25 which is interesting but that median about 1.7 I think is that's always a number I've used in my head is like how many people are going to convert to paid in an app it's a few percentage points usually if you're lucky maybe you can get close to five I think generally true so I'm glad we LED with this in the report as like the biggest takeaway because ultimately I don't think all subscription businesses need to convert more users a lot are premium and they have more generous premium tier maybe they monetize via ads maybe they have a Marketplace or other

[18:51] monetization layered in and that's another Trend we didn't I don't think talked about much in the report but this kind of hybrid monetization is something that's definitely I think we talked about a little bit last year and definitely been talking about it in other episodes of the sub Club podcast but 1.7% median turning people into paid subscrib like this it's such a numbers game 98 users who never pay for every two that do from download I think the scale of it sometimes especially people who don't do this work day in day out don't realize certainly users don't understand the economics that 98% of people who download your app aren't

[19:27] going to give you a dime they're not useless but they're not going to monetize probably yeah a couple other things I thought interesting to point out is that in this chart and again it always sucks like trying to do a podcast about charts yeah it's great everybody loves it and I guess we didn't mention this at the start but go to Revue cat.com report to follow along so pause your podcast download the report and then go to the download to paid chart and what you'll see is yellow is North America and pretty much in every category North America download to paid is just way higher than any other

[20:03] country in the world except for as Jacob pointed out interesting that in travel and education and a few other categories there are some standouts in other geographies but generally it is a very kind of North America Focus that on average a North American user is way more likely to become a subscriber to your app than pretty much any other country in the world what's interesting to me that because this is a rate right it's a percentage the fact that the US is so much a higher percentage tells me that probably not enough people are doing Regional price discrimination because ideally you would probably want to lower your price in those countries

[20:42] you'll lower your price but you'll raise your conversion rate and you could potentially like reach your max value curve assuming your North American rates are on par but like if people were perfectly efficiently pricing you would think that for a given distribution of consumers like the same percentage of them would be buying if the price were set at like an optimal Point again all these things are really tricky because you have many many dimensions of things that interplay yeah and I would say the counterargument to that and this is something I don't have data on but I've talked to several developers who think this and who look at their data and

[21:14] think this to be true in a lot of countries you end up converting the kind of middle class and upper middle class who aren't as price sensitive as the average consumer in that country and so if you do drop your prices you're just lowering what those middle class and upper middle class people end up paying you versus actually extending the price low enough to where the kind of average consumer in that country something you should test if you can r.com experiments I don't know if that works but there's experiments on our website but that is something you could test and run because yeah you might be right again it's like

[21:49] you're dealing with so many nonlinear distributions of things it's really difficult to know without real experimentation I think both points are valid like for some apps it's going to be the case that the monetization is not going to improve with regional pricing but for some apps it actually will could yeah just depends on where you're sitting on the value maximization curve exactly all right the next top takeaway is that the top 5% of newly launched apps generate over 200 times more monthly Revenue than the bottom cor child does one year after launch I'm not sure why we we feel like shoving everybody's NOS in this one uh kind of

[22:24] sucks I'm sure there's some listeners in that top 5% but the rest of us just like what what the heck this is just a natural side effect of the way that power laws work in the world right where each order of magnitude and revenue you go up that you go down and Order magnitude and number of actors generating that Revenue in most business and competitive markets and so it's interesting I don't know if it necessarily is actionable my advice become one of those top five% that's my advice I don't have the data here but there's a lot of meat in that long tail so you think about who's in that top 5%

[22:56] it's Netflix maybe not So Much Anymore but it's like the top brands I mean HBO Max I know does in out purchases they're probably one of the top ones Disney plus is very in on out purchases Fortune 100 brands are going to dominate just because of their brand awareness and mass consumer appeal so don't get too demoralized by that because there's lots of riches and niches like all the way down the curve so yeah and just to be clear for listeners all of this data is actually Revenue cat data only and those big streaming companies are not yet Revenue cat customers so we don't have their data in the mix but broadly

[23:25] looking at the subscription app category to far away interesting the most Revenue with power laws no matter how you slice it it's going to be true right like power all the way up I do think it's encouraging also though like if you're an indie developer and you just got your app out there and you look at these numbers you're doing something you're making some money and a lot of these are going to be side projects and nice and weekends and stuff like that and so it's cool to see how many apps do make some amount of money though and we see this all the time it's really fun inside

[23:56] Revenue cat weird software people make yeah yeah people tweet out hey I just got my first subscriber hey I just crossed like $100 in monthly track revenue and for like a night and weekend project that you're just throwing out there into the world it's pretty cool that you can build something that like people fre kind of right hobby money at least there's one breakdown in this piece of data that's interesting which is that the median revenue for new app after a year is $50 which like should be a little upsetting but basically like half of apps launched a year later make almost no money which probably surprises

[24:30] a lot of people right and I think this shouldn't be discouraging it just highlights that while most apps don't work out or most people don't put enough effort in to make them work out or they're just not interested or it's just like a side project or it's whatever it's a thing it doesn't take a ton of effort to get you into that second half and the numbers go up rapidly after that point which is interesting right like so we have some data here it's roughly 50 for the median but if you just get into that upper cortile it jumps by almost a factor of 10 to like 3 or 400 and then

[24:58] once you're in that upper cortile then when it starts to go up really precipitously again because of power law effects it's like the winners will continue to be winners and most people when they have an app that doesn't really take off a lot of times they divest naturally right which is good I mean that's a sign of a dynamic and efficient market that people are not focusing too much on the ones that aren't breaking out and they're doubling down and growing the ones that do break out and this is what you see a ton in like the Indie hacker space and stuff say you you just keep building until it

[25:26] makes level IO guy yeah yeah he was just talking about today his takeaway after all these years is that no matter how good he gets the probability that something works out for him is still pretty random the only bet is to like keep trying stuff until something really works and so that would be my takeaway from this is like don't get discouraged because you don't feel like you ever be in that top 5% top cortile you just got to keep trying stuff until something really cracks and then the way subscription works you just double down and you compound into that as long as you can that's sort of the nature of

[25:53] growing something really big in this game I think the toughest part is deciding when to double down on what seems like it's not working and maybe this report will help with that like if you're in that category of you haven't quite hit the $50 a month in Revenue we've talked about on the podcast so many developers who and maybe it wasn't quite that $50 in Revenue but Curtis Herbert made like 10 grand his first year that's a lot more than $50 right yeah it is that puts him in the top 5% actually yeah but it's tough to know like when to keep doubling down on the

[26:26] existing like if you're making thousands of dollars in your first year like that's might be enough of a signal to keep reinvesting if you're making tens of dollars any app that's got any amount of product Market fit and has any kind of legs like if you think you released something that was just useless or just very very close to MVP and you only make $50 I wouldn't take that as a valid data point but like if you build something pretty good you think it's really good you invested a lot and in the first year it's not naturally making $10,000 or something along those lines I don't

[26:53] think fixing any number in our reports probably going to help I would suggest if you got a different idea try something more radical and that might be advice generally on this like the further you are away from the metrics you want you should proportionately increase the radicalness of the testing and experimentation you try right if you have pretty good conversion rate don't go crazy but if you have total trash like you're not losing anything just try something nuts you want really high variance like dice rolls and rrolling and building a new app might be the biggest experiment you could do right yeah and some of the experiments that

[27:25] need to be done though in these cas is if you are making less than $50 a month on your app after a year is like how are you getting attention and figure out a way to get more attention if you just put it out into the world and if I build it they will come like figure out how to get attention that should be your final dice roll before you give up on a project is like really try and figure out how can I get attention you're not going to get traction just from background noise on the App Store anymore right you have to kick something

[27:53] to try but do something if you do and nothing takes off then yeah you know and this is really hard for entrepreneurs across the board like when is it time to throw in the towel or roll or try something new it's never an easy answer because there's tons of sunk costs and all kinds of things correct me again David because it's $50 per month that's the cortile it's not $50 for the whole year it's $50 per month by their 12th month which is marginally less bad but all right number three of the top takeaways the average realized LTV per download in North America 14 days in is

[28:26] four times the global average at 35 cents compared to 8 cents a multiple that exists both on the App Store as well as on Google Play I was just trying to Google North American GDP per capita versus world GDP per capita but I'm surprised it's not actually higher than that I guess because true rest of world GDP per capita is not going to be inclusive of the non-north American App Store users there's definitely some bias in the fact that the iPhone was a us first invention and there's probably some Lon share of the developers that are here we see us is our biggest single country I think maybe EU and aggregate

[29:00] might be a close second for Revenue cat but the US is still very dominant it's still King yeah you know there's always going to be things in reports like this that I wish you could break down a hundred more ways it would be fascinating maybe we can do this as a follow-up log post at some point but take especially this key figure because I do think this is so interesting the average realized LTB 14 days in and then 60 days in is the chart we're looking at and we bundle Europe as e mea which I had to look up that acronym again today but it's Europe Middle East Africa is

[29:34] the a Africa is I think it's Europe Middle East Africa is the there you go Europe Middle East Africa or emia if you will the first time you ever meet a Management Consultant you're going to hear the words emia and Lam and you're going to go like what are we talking about I don't know what these words are it would be really fascinating to actually like break this down country by country this specific one because I do think that North America and North America again does include Canada and I believe it depends who you talk to like I don't know sometimes folks throw it in sometimes they'll consider Mexico in

[30:07] Latin America category but yeah I'll make sure that we put this in the methodology whether or not we included Mexico or not but anyways it would be fascinating to break this down country by country because I think the US would still lead far and away but I do think certain European countries like the UK maybe even Australia from talking to other Vel opers on a per capita basis there are probably other countries that are actually closer to North America than it looks like in the data because we're bundling so many countries into EMA and rest of world and whatnot I think worth pointing out here and you

[30:43] can kind of see it in a lot of the charts here is the relative strength of Japan and South Korea for our markets especially relative to their size these are non-trivial markets they tend to be dominated by local players but they're very close you know again Europe is 30 Country I don't know how many countries are in Europe combined with all distinct languages but Japan and South Korea are monocultures more or less in those countries and single languages and may be worth focusing on even though they can be difficult to break into in terms of like if you're looking for secondary markets and I think like we're talking

[31:12] about this at Revenue cat right now which is like starting to look at our local specific strategies as a SAS business and I think for Consumer it's even more important to be strategic about where you focus because it can have a good upside but it's also comes with like substantial costs and so you don't want to go localizing for you know I don't want to throw any country under the bus being like small and not worth it but like there are some that are going to get you a better return on investment than others and you should be strategic about how you deploy those resources to the point I made earlier as

[31:40] well if you look at a country like India broadly you might think it's not worth localizing in India but there is a thriving middle and upper middle class in India country right that's the other thing the per capita might be low but the number of people is much bigger so big yeah so there are opportunities even hidden in some of these averages that you need to understand for your business whether there is relevance in some of these bigger countries that maybe on average have lower income but might actually do really well in your particular case the other thing I thought interesting to point out in this

[32:13] chart is that Japan and South Korea both actually monetize really well on the Play Store they actually monetize better on the Play Store in terms of realized LTV than they do on the App Store now some of that is South Korea is the headquarters of Samsung and so it is a very kind of Android and Samsung focused country but I was actually surprised to see that the same was true of Japan as well yeah I mean I think there's The Stereotype that iPhone owners are higher payers and follow some there's some cultural connotations that at least in the west we have around iPhone versus Android and things like this but you

[32:47] know those are just that cultural stereotypes they're not necessarily like hard and fast rules and I mean even in Europe Android is much more popular I don't know as a spending platform but on a day-to-day basis bis it's a much more popular platform we all work in often like the tech ecosystem bubble where iPhone and iOS is dominant but it's not the real world so yeah you have to think about that too in terms of your multiplatform strategy of you might want to consider going multiplatform before you consider a focused localization effort just for that yeah totally and then one of the Striking things too is

[33:17] that rest of World Android just gets crushed by iOS and I think that's maybe that point of these are the $80 Android headsets in third world countries that just aren't ever going to monetize very well at all they're not made for App Store monetization right they're made for a different case all right so the fourth key takeaway is that the share of monthly subscribers retained after 12 months dropped by 14% last year across categories and impacting both the best and the worst performers alike this is the one area in the state of subscription apps report this year that was a soft spot was retention and since

[33:58] we won't have time to kind of get to some of the other charts I did want to highlight deeper in the retention some of the other softness so first renewal rates dropped in 2023 across all subscription durations we're talking 3% for monthly median 133% for annual when you say that are you talking about relative drops or absolute values yeah yeah sorry relative drop not an absolute drop so it is interesting that the first renewal rates dropped and that the Year One retention dropped in 2023 and I think there's a lot of potential reasons why this is actually the case a lot of apps were pushing Harder Faster than

[34:37] ever in 2023 monetizing more aggressively like showing their payal more frequently bringing in maybe lower intent users like there's so many reasons why ramping right as you're pushing further into acquisition you're going to affect these numbers and like yeah the relatives are decently high for instance like the annual renewal rates are down % which is the effect you'll see on that like amount of money you'll make but if we talk about absolute numbers it's like last year we measured 30 a half% first year renewal rate this year it was 28 it's significant we see it across all durations but it's also not necessarily a total change in the regime of what's

[35:13] workable and what's not in terms of viable business models but it is interesting I mean and I I also won't hold back that there could be some bias in our data here as like our data set expands and Grows Right which should proxy to the overall Market you know Revenue cast more or less established and mature at this point too but there could be some of that but yeah certainly interesting yeah and then you would expect that like as apps grow faster as the market grows and we talked about this ton on the podcast too is how monetizing more strongly and putting pay walls earlier in the onboarding and

[35:45] things like that and for it to only be a 10 to 13% relative drop to your point it's not massive it's not groundbreaking like description app industry is falling apart everybody's turning I certainly even be normalized by those remaining 80% or whatever retaining better in the long run right so yeah it's hard to look at any single stage gate and really understand the overall macro impact but the number is true for what it's worth and I don't know how the total impact of that the number is as we measured it true and there probably is some bit of macro mixed in there of you know in 2023

[36:18] people were looking for things to cut and inflation with four kids I definitely noticed my grocy bill go up considerably in 2022 and 20 23 and so I probably cut a few subscriptions that I wasn't using as aggressively a little bit of macro too inflation soak up price changes happened in that year so that could even just be an explainer itself all right the last of the five key takeaways is that over 10% of turned monthly subscribers resubscribe within 12 months with categories like media and entertainment seeing even higher reactivation rates this was interesting and we haven't done this before so there was no kind of year-over-year compar

[36:57] but it is really encouraging another to get back to encouraging exciting stats is that you can win people back there are opportunities to get those subscribers back turn and it's a compounding effect too versus new acquisition right like new acquisition you're exerting some amount of effort for every new potential trial and sign up and then you know retain and churn but as you build that over time you have the number of churned unactivated customers grows and grows and grows and grows and grows it never goes down and so similarly that if you can reactivate 10% of that that 10% becomes bigger and bigger and bigger every year and you'll

[37:31] see this in very mature consumer apps that reactivation is a huge part of their growth model dualingo I know for example that is a huge component of their growth model is reactivating dormant users I know Twitter back in the day reactivation was always a huge driver of their growth model I'll admit we haven't done much here on Revenue Cat Side to like lean into this but I think it's something we want to do more to help you monetize or just reactivate and bring those users back into the fold because they've already primed they paid once they're very very likely to pay again if you just give them the right

[37:59] pitch to your point though it's actually more impactful the larger you are and the more people you've had previously subscribed that aren't not one strategy right yeah exactly before you think oh man I need to go reactivate all these subscribers and put a ton of work into CRM and win back campaigns 15 users turned last month let's build out infrastructure it's like no don't worry about them wait till there's 500 or a thousand exactly like grow first and then think more about reactivation because it's going be even more powerful than to or do just the lowest hanging fruit the easy winds here that assumes there's nothing else to work on right

[38:34] you know you want to be very focused on like funnel and very basic acquisition retention stuff in the early days and then you transition more to like reactivation over time yep totally all right well that was the five key takeaways that we covered in the report I think we have time to squeeze one more in and this was the one I found most striking and I think is maybe the most actionable if you're not already doing this you should and so the title of this chart is that most trial starts occur within the first 24 hours and then you look at the chart and again I'm going to

[39:06] try and describe a chart on a podcast but blue is within the first 24 hours and then red is one to three days yellow is four to seven days and in pretty much every category across the board blue is just dominous most is an understatement it's like the far it's like 70 plus% on average and so this is something worth knowing if you don't know this but yes most of your effort should be focused on that very first user experience getting a trial started for two reasons one you have the maximum user intent they just downloaded your app this problem that they have is acute to them at that

[39:42] moment so they're very very primed and then secondly it's just a law of numbers like most people are not going to open your app the second time unless you hook them this is true for any kind of sales like you really want to like land that message and that pitch in that moment because you might not have another chance lot of seem I see people struggle and be like Oh I'm going to let people sign up and then they're going to set an alert and then on four days once they've taken some sort of action then I'm going to hit him with the pay wall and it's

[40:05] like yeah that sounds like a really ideal experience that one fifth of the downloads are going to see right so like as much as you think that might be ideal I will beat you just by putting a buy button on the first screen by pure law of numbers right and that's sort of the like un aour app design things that you sometimes need to do to actually optimize the business this met just really drives that home you can still do that in tasteful ways right like you can do that without compromising that much but yeah this is one of those like truths of apps that you just have to

[40:34] know like you got to get that trial started right away yeah and then again when looking at Opportunity those 15 people who turned last month is a very small number compared to the hundreds who opened your app on any given day and there's a lot of smart things you can do here as well Jake Moore talked about this a lot and it's something I'm actually working to to implement my app soon is that if they don't subscribe in that first session hit them in that first 24 hours like when the app is still fresh in their mind hit them with a discount in that first 24 hours right

[41:08] their Peak intent is probably going to be right then so just get them when you can all right well this has been a ton of fun Jacob we'll see you on the podcast I'm sure I'm gonna be inv back I'd love to I'd love to be on this podcast but I always look forward to the state of subscription so hopefully less than a year from now cuz this is a little late for us don't blow us up David we always meant to launch it in March you got to keep the facade up we're perfectly on time we just wanted to do it later than every other uh

[41:35] company that does these that was the whole plan all of course but yeah looking forward to the 2025 report and I think there's going to be a lot of really fun and interesting things to discuss then but yeah go download the report let us know what you think let us know how to improve it and hopefully this report will help you make more money thanks so much for listening if you have a minute please leave a review in your favorite podcast player you can also stop by chat. sub club.com to join our private [Music] community

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