Why is CapCut Cutting Its Free Tier?
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Not many know this but TikTok, yes, the TikTok, offers a video editing app that's been growing quietly and is now the highest-earning app in its group, eclipsing incumbents like Facetune, Splice, and Picsart.
CapCut started out free and then added an optional subscription level back in 2022. Now, CapCut is going all-in on subscriptions and as of the weekend, is dropping its free tier.
Why would CapCut do this to its users?
The easy (and unpleasant) answer is that they simply don't need them...
That sounds pretty harsh, so I have to add that I don't know if that's the case. However, looking at CapCut's revenue, I can see that this guess starts to make a lot of sense.
According to our estimates, CapCut's net revenue hit $17.6M in July, an all-time high for the app. This is net, which means it's what Bytedance gets to keep after forking over store fees to Apple and Google.
July wasn't just an all-time high for revenue but also for month-over-month growth, which shot up 32%.
And while July was great, CapCut's revenue growth has been great since it switched on monetization. It grew to $1M in monthly revenue in just four months, $5M 8 months later, and $10M 6 months after that.
CapCut's growth also slowed down its competitors, and the combination eventually gave CapCut the lead over one of its strongest rivals, Facetune, earlier this year.
Like many before it, CapCut's free tier was an investment Bytedance made to establish itself in a crowded but lucrative niche. Now that it's the leader and revenue growth is healthy, that investment can pay back.
I expect a big outcry from the community that CapCut will likely ignore without consequences.
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All figures included in this report are estimated. Unless specified otherwise, estimated revenue is always net, meaning it's the amount the developer earned after Apple and Google took their fee.
