Subscription apps - statistics & facts
From SVOD entertainment services to mobile fitness and health apps, subscriptions are one of the most common pricing models for digital purchases, with consumers increasingly open to committing to recurring payments and even lifetime subscriptions. Between 2021 and 2025, subscription revenues of media and digital content are expected to grow by over 13.5 percent, with consumers generating approximately 1.26 trillion U.S. dollars on services with recurring billings by the end of 2025.
In 2021, global revenues generated via subscription apps have reached 18.3 billion U.S. dollars, up by almost 41 percent compared to the previous year. In the United States, the leading subscription apps distributed via the Apple App Store amassed 6 billion U.S. dollars in user spending in 2021, while subscription apps distributed on the Google Play Store generated 2.5 billion U.S. dollars in the same year.
In a move that saw mixed reception, Apple added a new autorenewal app subscriptions policy with their iOS 15.5 updates in May 2022. iOS app subscribers will now see their subscriptions automatically renewed without explicit consent, but could also allow developers to set price increases without the user’s formal agreement.
While this monetization method is versatile and can be applied to virtually any app category consumers show an interest in, mobile gamers appear to prefer one-time purchases and paid apps: as of the first quarter of 2022, merely 36 percent of mobile gaming revenues came from subscriptions, while non-gaming apps generated over 80 percent of their revenue via this monetization model. In the United States, mobile gaming revenues generated via subscriptions in 2021 amounted to approximately 780 million U.S. dollars, while virtual goods sales in the same year reached 18 billion U.S. dollars.
As of March 2022, eight percent of health and fitness apps offered subscriptions, as well as 4.8 percent of entertainment apps and 4.4 percent of education apps. Around five percent of photography apps are monetized through recurring payments, with users subscribing to use premium filters, lighting options, and video editing features.
Pay-to-download, ad-based, or subscription?
While most mobile apps are free to download and use, free or freemium apps can combine different direct monetization strategies to reduce their dependency on advertising. Freemium apps have managed to carve out a slice of the market and maximize the potential of ad-based monetization for free users while offering premium functionalities to paying customers. In 2021, mobile publishers worldwide reported that hosting video and display ads were the most popular monetization method for both gaming and non-gaming mobile apps. While subscriptions were only preferred by 21 percent of gaming app publishers and only by four percent of non-gaming apps, a recurring billing system comes with the advantages of a higher price point than one-time in-app purchases and a reliable revenue stream. Additionally, offering subscription-based packages addresses the challenges of user acquisition, often providing a higher return on investment.In 2021, global revenues generated via subscription apps have reached 18.3 billion U.S. dollars, up by almost 41 percent compared to the previous year. In the United States, the leading subscription apps distributed via the Apple App Store amassed 6 billion U.S. dollars in user spending in 2021, while subscription apps distributed on the Google Play Store generated 2.5 billion U.S. dollars in the same year.
Subscriptions and app store policies
The potential revenues of apps implementing subscriptions have not gone unnoticed by major app stores, which charge commissions to host third-party apps in their ecosystems. As of July 2022, the Google Play Store charges 15 percent commission fees on subscriptions, half of their standard rate, while the Amazon Appstore charges 20 percent of apps’ subscription revenues versus their standard 30 percent commission fee. The Apple App Store charges a 30 percent standard fee on publishers’ revenues from subscriptions but encourages apps to retain subscribed users by decreasing their fees to 15 percent after the first year. Additionally, the Apple App store Small Business Program for publishers with annual revenues lower than one million U.S. dollars has a commission fee of 15 percent for both in-app purchases and subscriptions.In a move that saw mixed reception, Apple added a new autorenewal app subscriptions policy with their iOS 15.5 updates in May 2022. iOS app subscribers will now see their subscriptions automatically renewed without explicit consent, but could also allow developers to set price increases without the user’s formal agreement.
Subscription-based apps
On the user side, subscriptions provide a lower entry point to try out premium products, breaking up the costs of the service into weekly or monthly fees. Subscriptions have been a part of first-party apps monetization strategy, with apps developed by Google and Apple often being pre-installed on Android and iOS devices and only one step away from enticing consumers to join their paid plans. According to a study of iOS users in the United States, during the first three quarters of 2021, more than half of respondents reported having a subscription to YouTube Premium, while 35 percent of respondents reported subscribing to other YouTube products such as YouTube Red or YouTube Music. Among Apple apps, Music and Music Family were the most popular products for U.S. iOS users , with half of the respondents reporting having a subscription to these services in the same period. Cloud storage packages were also among the most popular Apple products for iOS users, making up 28 percent of all subscriptions sold in the Apple App Store.While this monetization method is versatile and can be applied to virtually any app category consumers show an interest in, mobile gamers appear to prefer one-time purchases and paid apps: as of the first quarter of 2022, merely 36 percent of mobile gaming revenues came from subscriptions, while non-gaming apps generated over 80 percent of their revenue via this monetization model. In the United States, mobile gaming revenues generated via subscriptions in 2021 amounted to approximately 780 million U.S. dollars, while virtual goods sales in the same year reached 18 billion U.S. dollars.
As of March 2022, eight percent of health and fitness apps offered subscriptions, as well as 4.8 percent of entertainment apps and 4.4 percent of education apps. Around five percent of photography apps are monetized through recurring payments, with users subscribing to use premium filters, lighting options, and video editing features.
