The Future of Subscription Apps – New Opprtunities and Challenges

Recurring subscription revenue is the holy grail for many businesses, not just apps. For instance, eMarketer projects subscriptions to OTT video services will hit 2.15 billion by 2025. Of course, video – or television subscriptions – seem almost old school at this point. Increasingly, however, subscriptions are an important monetization method for mobile apps of all types – especially on iOS. 

Statista reports that “the top 100 subscription apps in the Apple App Store dwarfed user spending on the top 100 subscription apps in the Google Play store.” In fact, in 2021, global user spending on the leading subscription apps via the App Store amounted to $13.5 billion, compared to just $4.8 billion dollars in the Google Play Store. Either way, billions of dollars are at stake and savvy apps will perfect their subscription strategy to capitalize on this opportunity.

The subscription app opportunity

Sensor Tower discovered a 41% increase in in-app revenue for the top 100 subscription apps by revenue in 2021 – and importantly, 90% of top-grossing U.S. apps included a subscription option in Q4 of 2022. It’s clear that users are willing to pay for great content, but many of these top apps are in entertainment – think HBO and Netflix – or gaming. Apps outside of this vertical – especially new entries to the market – may have a harder time imagining how to make subscription revenue a reality. 

However, subscriptions have helped propel non-gaming apps to new heights. Sensor Tower found, “More than half of App Store spending in the U.S. now comes from non-game apps. This boost in revenue is in part thanks to subscriptions, which non-game apps have increasingly adopted over the years. In 2Q22, 400 apps generated at least $1 million in consumer spending, up 900 percent from 50 apps in Q2 2016.” 

Mobile app creators are not the only ones recognizing – and revolutionizing – the subscription opportunity. For instance, Acast co-founders Måns Ulvestam and Karl Rosander recognize that subscriptions are not one-size-fits-all solutions and are aiming to change the way we think about subscription revenue. 

“Subscriptions are great if you’re a heavy consumer,” Ulvestam told DCN. “But that’s not true for everything. People might want to have one or two newspaper subscriptions, maybe a podcast and a couple of streaming services. But eventually, all the subscriptions add up to too much.”

Ulvestam and Rosander founded Sesamy in March 2021 to help usher in the era of a la carte purchases with single purchases of audiobooks and eBooks. Earlier this year, 

The team launched “a single purchase option for podcast episodes and series. These can be bought via Sesamy and listened to with any podcast app.”

It’s no coincidence that many of the content types Sesamy aims to revolutionize are often consumed on mobile devices. The revenue is there for the taking, but as new innovations in content monetization arrive on the scene, it’s clear that getting your strategy right is more important than ever.

Choosing a mobile subscription strategy 

The beauty of subscriptions is that they come in many shapes and sizes, making them a flexible form of app monetization. Some apps – like Netflix – are purely subscription-based, and users cannot gain access to the app’s content without a subscription plan. But this isn’t the only way.

Freemium models often work well for apps of all types, allowing users to gain access to basic functionality for free but requiring them to upgrade their subscriptions to gain full access all the apps features. Tiered access to an app can let users pick the plan that’s right for them and apps like Slack and Dropbox have used this strategy to great success. This model also works well with product-driven marketing strategies that rely on giving people access to products for free with the aim of upgrading them to paying users. 

Even as subscriptions grow in popularity, fatigue is setting in. Deloitte’s 13th Digital Media Trends survey found that 47% of U.S. adults are frustrated by the number of subscriptions. Earning users’ subscription dollars will only get harder as this fatigue settles in.

Increasingly, however, new solutions will allow apps to further personalize subscription packages – giving users more control over the content they want, the functionality they need, and more. Savvy app publishers will think ahead and figure out how to stay ahead of the competition, providing new value through personalized subscription options to stay on users’ must-have subscription list.