Five key trends for consumer subscription apps in 2024
Revenue continues to grow and there's untapped potential. Is it yours for the taking?
Apple’s App Store, by gross revenue, is now bigger than 90% of Fortune 500 companies. Let that sink in for a moment.
“How much more stuff can people truly buy?” asks Eric Crowley on the Sub Club podcast.
“The answer is a lot. We don’t see that slowing down.”
The main headline is clear: the opportunity for subscription apps is richer than ever before.
In this blog, we’re going to delve into five of the key takeaways from that report and podcast discussion, so that you know where the world of subscription apps is headed in 2024.
1. The App Store is growing and it’s resilient
Consumer subscription fatigue is often seen as a pervasive threat to subscription app developers’ success. But is that perception actually accurate?
With almost double revenue from purchased content since 2019 alone (and as host to a billion subscriptions), the Apple App Store’s growth seems to show anything but signs of app fatigue from consumers. On the contrary, prime opportunities for growth are many. The App Store ecosystem isn’t just surviving — it’s thriving.
“When you start stacking up the revenue, it just grows consistently year over year,” Eric says. Apple’s looking at $95 billion in 2023 (doubled from $46 billion in 2019), just shy of Tesla’s $100 billion but overtaking the $85 million estimate from consumer goods giant Procter & Gamble.
Apple TV, Apple Music, gaming, and films also contribute to this eye-wateringly large figure. But it’s important to recognize that — regardless of content type — people are purchasing through iPhones and the App Store, which make up the Apple ecosystem.
“We’re talking about this huge sleeping giant,” Eric highlights. “This is a huge market with lots of dollars, so pay attention — it’s growing faster than almost anything else out there.”
2. Regulatory pressure could be a win for app developers
The growth of in-app purchases brings a different kind of attention to Apple and Google, although not necessarily the type they want. The regulatory spotlight is shining on their app store fees — and relaxed requirements, more open payments, and fee reductions might not be far off in both the EU and U.S. markets.
While Apple won their recent dispute with Epic, a $1 billion class action lawsuit from 1,500 developers against them is in the pipeline. “Ultimately, at some point, there will be a crack,” Eric says. If the regulators want to crack down on Apple, they’ll find a way.
Even if Apple moves tactically in order to win back transactions currently lost to alternative payment systems, any fee changes could be both a legal win and a potential cash flow boost for app developers. “Apple will find a way to make it back,” Eric says. Developers may lower prices to boost subscriptions or else incrementally increase prices alongside adding new, more profitable features.
3. The line between B2C and B2B is blurring
If you thought there was a clear boundary between B2C and B2B, you may want to think again. A major shift is happening as the line between consumer and business blurs.
B2C bastions like Peloton and Headspace — which exploded during the pandemic — are now strategically expanding into B2B. During COVID, “people needed new solutions to new problems,” Eric explains. Increased stress levels during lockdown encouraged people to turn to these apps and others like them (including Calm) as substitutes for traditional emotional outlets like church and therapy.
Now, in a post-COVID market, other major players like the Weather Channel and Evernote are joining the party. “People are looking for new avenues of growth, and B2B is a huge untapped market,” Eric says.
This isn’t a pivot. Instead, it underscores the potential of consumer-centric design to unlock new business opportunities — based on the belief that what consumers love, businesses will too.
B2B is a huge untapped market. Is everything a consumer needs readily applicable for business? No. But there are definitely a few that make a ton of sense for businesses to offer their employees as either benefits or ways to make them more productive or to make their workforce more efficient.Eric Crowley
4. The most successful subscription apps care about the 3 Cs: content, commerce, and community
Every consumer subscription business faces three key challenges: acquisition, conversion, and retention.
For Eric and GP Bullhound, their “thesis” is that the most successful subscription apps solve these challenges with the three Cs — content, commerce, and community.
“If you’re a consumer brand, the hardest thing is acquiring new customers,” Eric says. The challenge of acquiring new users applies to almost every category of direct-to-consumer (DTC) brands, from luggage to nutrition.
It starts with providing the answers to the questions of searchers using search engines or chatbots. That’s the content: providing best-in-class solutions to consumer challenges organically. Next up is convincing those users to make a purchase — for subscription apps, that will be convincing them to sign-up for a trial or subscription. That’s commerce. And the most passionate purchasers want more — they want engagement and to feel like a part of the brand. This is the community aspect, which is key for retention.
The 3Cs can then be thought of as a cycle: user-generated content from your community feeds back into the first C, content, providing new users.
The 3Cs don’t necessarily apply to all subscription apps; not all apps primarily feed top-of-funnel with SEO or have a community aspect to their product. But, take a look at the most successful subscription apps, and you’re likely to them.
5. There’s untapped subscription app market potential in category-killing industries
Sectors like femtech and family management are promising arenas for new subscription apps, but they’re just the tip of the iceberg. A few brands dominate established categories such as dating or fitness. But untapped categories are ripe for disruption and give subscription app developers the chance to innovate and gain outsized rewards.
Consider the ultra-competitive baby toys category. Competitors acquire customers with solid content and service, but there’s an inevitable churn point. The shift in lifetime value (LTV) is huge and can change the customer acquisition cost (CAC) of the entire business — as long as customers can be monetized over a predictable 36-month period. The problem is that the space is too competitive.
Contrast this with femtech. “Who’s the Apple of female health?” Eric asks — the go-to brand that you don’t question, you just buy. “There isn’t one. There should be. Why isn’t there?” Apps focused on fintech, family management, and education also carry the potential to become massive businesses.
These are the category-killers, and finding the next one could be your ticket to success.
Going into 2024 with your A-game
Just as the 2022 CSS report offered up the trends to ride through 2023, this year’s report provides plenty for developers to chew on for the coming year. Amid some major upheaval, it’s an exciting time to be in subscription apps.
Like the gold rushes of days gone by, if you know where to look and what to capitalize on, you’re already halfway down the road to serious growth and success.