The Proliferation of AI Tools is Taking its Toll on Grammarly

Ariel Ariel

This is a single insight from This Week in Apps - Time to Adapt. Check out the full article for more insights.

Writing is one of those things that are challenging for most. Those who aren't experts need all the help they can get, and the experts can use a watching eye. That's where Grammarly, an AI-based tool for writing comes in, and in my experience it's fairly useful.

Over the last few months, thanks to ChatGPT, AI has made its way into almost everything. From standalone apps dedicated to writing to features built into popular writing platforms like Notion and Google Docs.

Grammarly's AI isn't ChatGPT under the hood, but here's the important question - Can that protect its growth when AI for writing is becoming more common than ever before?

Short answer - Not really...

Grammarly's mobile apps, which bring Grammarly's AI for writing as a keyboard, have enjoyed pretty consistent growth over the last few years.

Revenue grew about 50% in 2020 and a whopping 150% in 2021, as more communication transitioned into writing. Revenue dropped in early 2022 but still grew a modest 20% throughout the year.

2023 is where things started going sideways.

After a strong Q1 where revenue grew nicely, ChatGPT became all the rage and thousands of apps were built around it. Many to help with writing, and "thanks" to a very early market, the prices were all over the place.

Grammarly's mobile revenue reacted and started dropping roughly 10% every month. By July, revenue dropped to where it was a year prior. All of Grammarly's growth disappeared.

In August Grammarly started making a push to highlight its AI and improved its offering which helped push revenue up to May's level. Still not great, but better than dropping...

I've poked at thin ChatGPT wrappers in previous insights and their lack of competitiveness, but the magic of ChatGPT has made it hard for full-pledged AI platforms to grow as well. That's going to be a problem for more generalized AI in the future and will lead to more specialized AI to target different tasks. Like writing.

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Tagged: #ai

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