The future of subscriptions on mobile: Scaling in a growing space
Subscription over-the-top (sub-OTT) is one of the most popular digital activities globally. eMarketer projects subscriptions to OTT video services will hit 2.15 billion by 2025. Streaming platforms such as Amazon Prime Video, Netflix, Disney+, and many others have grown the number of sub-OTT video users to similar levels as Facebook and YouTube users.
This steep growth in sub-OTT is one of many indicators that app subscriptions is a profitable but competitive space. We’ve gathered top industry trends for forward-looking app developers and marketers and offer three tips on how to scale your app in the rapidly expanding mobile subscription ecosystem.
Annual spending increases worldwide for app subscriptions
According to the latest data on the top subscription apps worldwide, Statista reports that the annual spending for 2021 reached $13.5 billion in the App Store and $4.8 billion in the Google Play Store, an increase from 2020 by 31% and 78%, respectively.
Similarly, Sensor Tower reports a 41% year-over-year increase globally for in-app revenue for the top 100 subscription apps by revenue for 2021, and that in Q4 of 2021, a whopping 90 out of 100 of the top-grossing U.S. apps include a subscription option. These high numbers indicate wide adoption of app subscriptions among consumers and reveal that the mobile subscription model is a successful app monetization option.
Big subscription platforms consider ads to scale instantly
Last year, HBO Max introduced an ad-based subscription tier at a lower price, while Disney+ rolled out its ad-supported subscription this March. Disney CFO Christine McCarthy says, “Based on our Hulu experience, we actually have more AVOD [ad-supported video-on-demand] than SVOD [subscription VOD] subscribers.”
Similarly, Rakuten Viki, a leading video streaming platform in APAC, uses AVOD to engage hard-to-reach audiences. The global platform has found that 68% of its users are Millennials or Gen Z, a younger demographic that typically doesn’t consume traditional TV. Rakuten Viki allows advertisers to choose pre-and mid-roll formats of five to thirty-second ads to engage with this demographic in a technique that’s relevant to the target audience.
Netflix may not be far behind its competitors, as its CFO Spencer Neumann said, “Never say never” when asked about ads on the currently ad-free streaming platform. In fact, analyst Eric Seufert writes, “The components of a scaled personalization engine are not substantially different from that of an advertising platform. With the exception of a bidding system and an interface for creating campaigns, Netflix’s personalization infrastructure contains everything needed for serving personalized ads, and it could be co-opted to do that.”
Even if your app isn’t at the same scale as the aforementioned subscription platforms, it’s essential to consider how to monetize your app. A subscription monetization model isn’t a one-size-fits-all approach. Rather, app developers can set up several subscription packages, each with a different value level. We recommend taking note of the uptick in ad-based subscription services and considering if this approach can be applied to your app.
U.S. health & fitness apps set to rise above 2020 records
Thanks to a global pandemic, 2020 was admittedly THE year for health & fitness apps. While 2021 saw a slight dip in users with health & fitness apps on their smartphones, eMarketer predicts 2022 and 2023 to surpass 2020 user levels. This upswing is likely due to several factors, including greater user adoption, increased interest in mindfulness and well-being apps like Headspace and Calm, and a continued health crisis influencing users to work out at home.
It should also be noted that all of the top 10 health & fitness apps in the U.S. for 2021 downloads offered subscription services, with various packages from free to premium. Health & fitness app developers would do well to consider which subscription models would work best with their app. By offering multiple subscription options, you open your app to a larger potential subscriber base.
Casual gaming and cloud gaming growth predictions run high
With the continual rise of fixed broadband, 5G, and satellite internet globally, cloud gaming is becoming more accessible than ever. Additionally, the compound annual growth rate (CAGR) of the global cloud gaming market is forecast to rise at a rate of 45.8% from 2022 to 2030.
Therefore, it should come as no surprise that major gaming brands like Xbox are looking to tap into the growing casual gaming market. Xbox Cloud Gaming, currently in beta, provides users instant access to hundreds of games on supported mobile devices, PCs, and tablets. As a result, users won’t need to purchase expensive gaming consoles or wait one hour for their game to install or download, and game developers can cut game production costs.
Gamesindustry.biz predicts app subscriptions providing free-to-play games, downloadable games, advertising-led games, and microtransactions gaming will be in healthy competition over consumer spend. If your app falls into the gaming vertical, check out our article on mobile game monetization strategies that work.
Three tips on scaling your subscription app
Mirroring industry growth, competition is mounting among subscription-based apps. To ensure your app walks away with a sizable amount of consumer spend, consider the following three tips.
1. Evolve with industry shifts toward user privacy
With Apple’s rollout of iOS 14.5 followed by subsequent rollouts and Google’s announcement of its Privacy Sandbox for Android, mobile attribution has become more privacy-centric and complex. App marketers must stay abreast of these changes in user privacy to understand how to acquire and retain users while maintaining industry standards and giving users full control over how and when their data is accessed and used. Check out How to build a subscription app analytics strategy on iOS 14.5+ for insights specific to SKAdNetwork.
2. Test user-generated content (UGC)
According to Mint, user-generated content (UGC) is the number one mobile marketing trend for short video apps. UGC is when customers share unsponsored content highlighting your product or service. Today, many brands utilize UGC by reposting the user’s content across their marketing channels to elicit an authentic feeling about their products.
To try out UGC, it’s first important to reach out to the consumer and ask for permission to share their content and credit them. Depending on the demographics you’d like to reach, consider sharing UGC across Instagram, TikTok, LinkedIn, Facebook, and Twitter. Then, set and test for KPIs like higher engagement or increased conversion rates. A major benefit of UGC is that it’s a non-expensive way to produce content for your app.
3. Tap into CTV advertising
Connected TV (CTV) is now the fastest growing video advertising platform, with over 80% of U.S. households with TVs having at least one CTV device. Using either contextual targeting or cross-device targeting, mobile marketers can master CTV advertising to reach a specific CTV audience with their subscription app campaigns. If you’re ready to turn CTV into a performance channel, try CTV AdVision, the first comprehensive CTV measurement solution.
Guess what? We have even more tips to help you scale your subscription app at large. Check out our guide Scaling your app to 1 million users: The ultimate guide, Part 1 to get insights on App store optimization and user acquisition strategies.