RevenueCat reports that AI-powered apps struggle with long-term retention compared to non-AI applications.
This research highlights a significant market trend: early monetization success does not translate into sustained customer loyalty. The findings are based on data from more than 75,000 developers who manage more than $11 billion in annual revenue.
According to the report, for AI apps, subscribers cancel their annual subscriptions 30% faster than for non-AI apps. After 12 months, the annual retention rate is 21.1% for AI apps versus 30.7% for non-AI apps. The monthly retention rate for AI apps is 6.1% compared to 9.5% for non-AI apps.
Weekly retention is the only period where AI apps have a higher rate of 2.5% compared to 1.7% for non-AI apps. The report notes that weekly subscriptions are not the most popular option for AI apps.
AI apps have a 20% higher refund rate than non-AI apps: 4.2% vs. 3.5%. The upper bound on refund rates is 15.6% for AI apps versus 12.5% for non-AI apps, suggesting higher volatility in revenue.
Despite retention issues, AI apps are 52% more likely to convert trial users into paying customers, with a conversion rate of 8.5% compared to 5.6% for non-AI apps. Additionally, AI apps monetize downloads 20% better, at 2.4% compared to 2% for non-AI apps.
AI apps generate 39% higher monthly realized lifetime value at $18.92 per month compared to $13.59 for non-AI apps. The annual realized lifetime value is 41% higher for AI apps, $21.37 vs. $30.16.
According to the report, AI apps account for 27.1% of all categories of apps on the platform. Photo and video apps have the highest share of AI-powered apps at 61.4%, while games have the lowest share at 6.2%.
RevenueCat’s analysis is based on subscription app providers using its tools to manage more than 1 billion in-app transactions. The company provides subscription management tools used by over 75,000 app developers.
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