A value added service with 5X return
Last year Appland released the first App Store Subscription Club together with partners. Consumers love the concept and the sign up for the club is astonishing.
In average the life time value (LTV) is 5 times the customer acquisition cost (CAC).
The example clubs we use for this data use online ads to recruit new users. Clubs with an efficient recruitment model can expect a higher revenue return.
Why are App Store Subscription Clubs a success?
At Appland we see five major reasons why subscription clubs are a success.
Nr 1 - Freemium = bad experience
The app market consist of three business models, premium, freemium and subscription. In Google Play only premium and freemium models are available. The most successful model of these two is freemium where app revenue comes from ads and in-app purchases.
For consumers this means that the experience of games and apps has changed. Sure they get the game for free but pay by ads bombardment. Also developers put in place gamification of pushing users to buy in-app purchases. The freemium model drive developers to focus less on the game and more on in-app sales.
Also users fight to find relevant and good apps among the 1.6 million available in Google Play.
This creates a bad tasted experience for consumers.
Nr 2 - The anti advertisement generation
With the success of Spotify and Netflix we see there is a market for ad free and easy to consume business models. For a fixed recurring fee users can consume as much as they like. There are no interruptions or messages that creates a bad experience.
Spotify and Netflix have proven that this business model work and consumers want to pay for content.
Nr 3 - Great content = Reduced Churn
All involved parties in an App Store Subscription Club want to keep churn low. The store owner and marketing partners want as many paying monthly users as possible. To create this they need content that consumers love.
Content that works in a subscription club is ad free and have no in-app purchases. This creates a better experience for users.
Nr 4 - Developers focus on game experience
In a subscription club developers are paid by how much their app is used. This creates motivation for developers to go back to what they love. Create amazing game experiences. The better experience they deliver the more users they will have.
Nr 5 - It is a win - win - win
In an App Store Subscription Club developers are winners because they can focus on what they love. Developing amazing apps and games.
The App Store distributor, marketing partner and the owner are all contributing to create a product consumers love with good revenue margins.
But the real winners are consumers. They get the experience they are looking for to a low recurring cost.
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Do you want to launch you own games subscription club?
