- The cost for app developers to sign up mobile subscribers plunged 58% in the past year as smartphone users showed a greater willingness to make ongoing payments for apps. The steep drop in customer acquisition cost for subscriptions contrasts with the 60% increase in costs to drive one-time app purchases, per a study that app marketing firm Liftoff shared with Mobile Marketer.
- Engagement of subscription apps surged 45% this year from 2018, with iOS users having subscriber rates of about 11%, compared with only 2.7% among Android users. Those higher subscriber rates have led to a 213% drop in app-purchase rates.
- Liftoff's analysis measures the results among 992 mobile apps, 349 billion impressions, 5.35 billion clicks and 128 million installs, among other data for the 12-month period ended Aug. 31.
Liftoff attributes the gain in app subscriptions mostly to e-commerce companies that charge a monthly fee in exchange for access to personalized and often low-cost product selections, such as the subscription box model of companies like Birchbox or BarkBox. Liftoff's study indicates that mobile consumers are more amenable to the idea of paying a monthly subscription fee for a service, giving app marketers a potentially significant source of steady, ongoing revenue. It's not clear if Liftoff's study also counts subscriptions to streaming services like Netflix.
The higher subscription rate among iOS users likely is the direct result of Apple's push toward ongoing payments through its App Store. Last year, the iPhone maker reportedly urged app makers to raise prices and build subscription revenues to foster a virtuous cycle of developing high-quality apps that make its platform more valuable. Apple also is developing subscription revenue for its fast-growing services business, which includes monthly payments for iCloud storage, Apple Music streaming and the Apple News+ digital newsstand.
Liftoff's study ended in August, and may not reflect newer Apple subscription services such as Apple TV+ video streaming and Apple Arcade gaming.
Meanwhile, some app developers have sought to avoid paying commissions to Apple and Google's app stores, which have become a focal point for consumer complaints and antitrust regulators looking into the possibly predatory business practices of the tech giants. Apple takes a 30% cut of first-year subscription revenue and 15% of renewal revenue in subsequent years — fees that app developers like "Fortnite" creator Epic Games have described as onerous and anti-competitive. Streaming video giant Netflix last year stopped letting new customers pay for subscriptions through its iOS app. Instead, the subscribers need to make direct payments on Netflix's website, letting the company keep more revenue.
Faced with growing competition from Apple, audio streaming company Spotify this year filed a complaint with European antitrust authorities that accused the tech giant of attempting to "purposely limit choice and stifle innovation" in its App Store.