Calm and Headspace, two apps that rose in popularity during lockdowns, are having the weirdest year so far in 2022.
First, let's talk about demand. That's not the weird part.
According to our estimates, combined monthly downloads of Calm and Headspace averaged 1.2M in early 2017. They climbed throughout 2018 and 2019, peaking once in 2020 with 4.3M downloads, and then again later in the year with 4.5M downloads.
Many expected this trend to continue, but right after that last peak, downloads started dropping, and fast. The couple ended 2021 with 2.2M downloads in December. Higher than where they started, but still roughly half of those peaks.
The downward slope continued in 2022, and at the end of November, downloads dropped to just 1M for the pair, according to our estimates. Lower than 2017.
Although there's a lot to stress over these days, lockdowns have ended and for many, life has returned to its scheduled programming, so this decline makes some sense overall, but... while demand has slowed down back to 2017 levels, revenue is moving in the exact opposite direction. That's where the confusion comes from.
Net revenue for the pair, which averaged $2M in early 2017, according to our estimates, doubled by 2018, and then again by 2019.
It grew consistently, but 2022 saw massive growth!
To give you better context - in 2021, the pair brought in $132M of net revenue from the App Store and Google Play. As of the end of November 2022, the total for the year has exceeded last year's. And by a lot!
Our estimates show net revenue in 2022 totaling $192M. And that's without December, the strongest month of the year for both.
Nearly double the revenue with less than half of new users. Confusing!
Demand != revenue. Many developers, especially indies, believe that to make more money you need more users. While that's generally the case, optimizing pricing and retention are as necessary, if not more, to the success of any app.
And that's even more important for subscription apps, where subscription churn is your biggest enemy.
If you're running a subscription business, make sure you're investing as much time into optimizing your pricing and reducing churn as you're investing in growth.
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