App Subscriptions - What Are They And How Do They Work In 2019?

Subscriptions are the norm for content-based apps, but many mobile developers are finding new, creative ways to leverage the model.

Over the past decade, subscriptions have steadily subverted the classic pay-to-own model. In 2019, music and streaming app subscriptions are ubiquitous, and it’s now possible to subscribe to anything from dog food to jewelry. According to Zuora, subscription companies have grown 300% in the past seven years. Subscriptions present a major opportunity for app developers: they made up $10.6 billion of consumer spend in the App Store in 2017, and that number is expected to reach $75.7 billion by 2022.

As we’ve already discussed, Apple is going all-in on the subscription model. The company plans to launch Apple Arcade, a subscription-based gaming service, in the App Store in Fall 2019. Apple Arcade will include 100 games from major developers such as Sega, Devolver Digital, and Sumo Digital. This isn’t the first move Apple has made towards subscriptions—in 2016, the company announced that it would incentivize subscription-based apps. Apple’s standard cut for any iOS app is 30% of revenue, but for developers who include subscriptions, that fee is reduced to 15% one year after user sign-up, making retention a top priority.

Global subscription app engagement is growing, which clearly presents an opportunity. But what defines an app subscription, and how can developers use them to maximize revenue? In 2019, some app developers have found creative ways to leverage the model.

What are mobile app subscriptions?

Mobile app subscriptions are recurring payments a user initiates in exchange for access to content, premium features, or services. At the end of the period, that subscription automatically renews until a user chooses to cancel it. Apps that use subscription models retain users by providing regular updates that improve the app experience.

Over a quarter of Apple’s 100 top-grossing apps leverage a subscription model. Many of these apps are also fully-fledged platforms in their own right, such as Netflix and Spotify, but this isn’t true across the board. Lifestyle, productivity, and security apps commonly drive revenue with the subscription model. Even some mobile game developers have found ways to build subscriptions into their apps.

Subscriptions may not be the best monetization model for every app. Subscription apps need to prove their value early to drive sign-ups, and the onboarding experience can be tricky to manage. Then developers are obligated to provide regular content, feature updates, or other value to retain users. That being said, app subscriptions offer a myriad of benefits in the right circumstances: they boost profits, guarantee a steady stream of revenue, and often lead to a better user experience.

How App Subscriptions Work in Non-Gaming Apps

For non-gaming apps, the subscription model is more straightforward, but there are still untapped opportunities. Developers continue to break the mold, finding innovative ways to turn users into subscribers.

Offer Premium Access to Content

With app subscriptions, content is king—meaning premium content is still the conventional driver behind subscriptions. However, content alone is not always enough to hook users’ attention, especially when competitors use the same model. The meditation app Calm found a creative solution to this quandary. When the app first launched, it offered a number of premium “meditation journeys,” and a “Daily Calm” session. Since then, the app has expanded to offer sleep stories, some of which are told by celebrities, including one from Matthew McConaughey. This strategy has earned the meditation app a strong lead over competitors, such as Headspace.

Create Custom Recommendations

Today’s consumers love personalized experiences. For apps that aggregate data, such as health habits, exercise goals, or fertility tracking, there is an opportunity to provide personalized insight. The developers of Lifesum, a diet tracking app, have made personal recommendations the backbone of their premium subscription. They leverage user data to create custom diet recommendations. For users, the catch is that they must sign up for a premium subscription to learn how those diets are structured. This has been a big draw for Lifesum’s 25 million active users.

Preserve User Progress & Data

Mobile gamers are eager to save their level and stats, and that same logic can apply to lifestyle or productivity apps. The daily motivation app, Fabulous, “takes users on a journey” to build good habits. A key way the app reinforces these habits is by tracking users’ success over time. Much like levels in a game, some “journeys” are only unlocked after the easier ones have been completed. Although the app subscription also unlocks premium content, the developers use the preservation of data as a value proposition to hook users at the free trial stage.

How Games Can Leverage the Subscription Model

The freemium model remains preeminent among mobile game developers, with rewarded video being the top-choice monetization method. Yet, some game developers have found ways to get in on the subscription trend.

Create Premium Content or Features

Mobile gamers may be used to the freemium model, but they understand some features will always be pay-to-play. A game developer could offer subscription access to exclusive worlds, or offer a weekly challenge—though this is less common. Most gaming apps that offer subscriptions bridge entertainment and gaming categories. One example is Smule’s Magic Piano, which offers access to a broader songbook and removes time caps for premium subscribers. Another example is Colorfy, a digital coloring book. This app offers Colorfy Plus subscribers access to new weekly coloring images upon release.

Give Players an Edge

The gaming community loves power-ups, extra lives, and cheat codes. Some app developers found a way to offer these bonuses on a subscription basis. Supercell’s Boom Beach offers two separate monthly subscriptions that fall into this category. The first is an “Extra Builders” subscription, which allows users to build or upgrade two buildings at the same time in exchange for a small monthly fee. For a slightly higher price tag, users may also sign up for the “Endless Reserves” subscription. This subscription allows a user’s troops to be trained instantly, eliminating wait times.

Offer a Private Gaming Environment

For MMO games, especially those that attract underage users, a private gaming environment can be a profitable subscription offering. Minecraft developers seized this opportunity with the Minecraft Realms subscription. The subscription offers users the chance to create their own private, always-online world. The Minecraft website includes messaging crafted for wary parents—it highlights that Realms offers a safe environment for friends only. The app offers subscription tiers that allow users to invite up to two or ten friends depending on their package, and those friends play for free.

Are App Subscriptions the Future of Mobile?

App subscriptions may be surging in popularity, but for now, their future remains unclear. Apple is betting that subscriptions will win the day, but the majority of game developers still use the freemium model, and to great success. Perhaps a hybrid model will emerge, where users may choose whether to subscribe or engage with ads in exchange for premium access.

The landscape is constantly evolving, challenging developers to come up with new, creative ways to acquire and retain users. Monetization methods will continue to expand and diversify, but it’s too early to say whether subscriptions will subvert other models in the long-run. In the meantime, it’s worth investigating creative monetization opportunities within the subscription framework.

Drop us a line at info@tenjin.com if you want to learn more on how Tenjin can help your subscription business.


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