This Week in Apps - OpenAI's Real Problem

This Week in Apps is a short, no-fluff, round-up of interesting things that happened in the mobile industry. Here are our top highlights.

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U.S. Revenue Index (vs. 30 days ago)

Insights

1. ChatGPT Has a Serious Problem and It's Not Its Executive Team...

A lot has happened to everyone's favorite AI over the last couple of weeks. The big executive/board battle is what most talk about these days, but there's something a bit more interesting - in my opinion - going on that's gone unnoticed.

Right after OpenAI's explosive demo day, and before Sam Altman became famous for getting fired over a Meet, OpenAI stopped accepting new paying subscribers for ChatGPT.

That's right, they simply said no to new money.

According to a tweet by Sam, they had to pause because they couldn't sustain growth - a great problem to have.

But my immediate thought is: "How much money are we talking here?"

And as I started looking at the numbers I realized that we can learn something very important from this. We can kind of reverse engineer ChatGPT's revenue churn.

That's pretty interesting!

Disclaimer: Before I dive into the numbers, I should make it clear that I'm looking at ChatGPT's mobile revenue here and not all revenue. Just what the mobile apps make from in-app purchases on the App Store and Google Play.

Losing Hundreds of Thousands Every Day!

We analyzed ChatGPT's revenue growth over the last few months, including the steep increase it saw before demo day, and estimate that since the shutdown, OpenAI has lost roughly $127K in net revenue (or roughly $181K in consumer spending).

In the two weeks since the shutdown, that amounts to nearly $2M. And this estimate looks at net revenue, which is what OopenAI would have kept after Apple and Google take their fees.

The loss comes from not being able to get new paying users and also current paying users churning (canceling their subscriptions).

That's A Lot of Churn!

For a long time now I've been saying that while ChatGPT is amazing, many simply don't know how to get value out of it. OpenAI stopping new paying subscriptions gives us a rare opportunity to estimate ChatGPT's churn.

If there was no churn, ChatGPT's revenue would simply look like the previous month as subscriptions are renewed.

That, however, isn't the case. The difference between the two is the churn. Roughly.

Looking at roughly two weeks of data, we calculate ChatGPT's revenue churn to be 14%. There's no absolute number of "good" churn, but by many counts, 14% isn't good at all. It's pretty bad - and that aligns with the theory that people don't know what to do with ChatGPT.

The fact that while subscriptions are on revenue continues to grow at an amazing speed is a testament to how exciting ChatGPT looks from the outside, but without more, retention is hard.

A Big Opportunity for Developers

OpenAI's GPT is an amazing product. As-is, it's a hard sell for the mass market, but only because it can do too many things. Focused products that use AI are already making a lot, and that will continue to grow.

Now, I'm not talking about basic ChatGPT wrappers that don't add value - those are slowly disappearing. I'm talking about actual tools that do something with AI.

If you're a developer and you're not looking for ways to harness AI, you're missing out.

2. Threads Is Outpacing X in Downloads Right Now

Threads, Instagram's response to Twitter (aka X, but I still call it Twitter), has seen downloads nearly double over the last few days - even before Elon's GFY moment.

Meta is putting a lot of effort into growing Threads so this isn't surprising. But is it actually working?

Yes. Yes, it's working!

Comparing new downloads of Thread with OG X (aka Twitter) we see that Threads is getting about twice as many downloads. In more absolute numbers, X saw 27M new downloads since September and Threads 41M, according to our estimates.

Those numbers include downloads of Twitter Lite, which hasn't been renamed yet.

Here's something that might surprise you but shouldn't. The biggest driver of new downloads for Threads is India. 11.2%, or 9.2M of those downloads came from India, according to our estimates.

the US was a distant second with 7.4% - 6.1M downloads.

India has been the growth driver for Instagram for quite a while now, which is why this isn't a surprise. But it's interesting to see it take the lead so early.

For context, the US isn't the biggest country in terms of new downloads for X either. The top country is Indonesia followed by India and only then the US. Although together, the three added fewer downloads than India alone added for Threads.

I don't can't answer the question of who will win this race but I do know one thing: Twitter lost a lot of momentum after rebranding and that's hard to build. Had it not rebranded, it would outpace Threads right now.

In tennis, they call that an unforced error.

3. Which Shopping App Grew The Most This Black Friday? (Not Amazon)

2023 hasn't been an amazing year for Amazon's downloads. Maybe everyone already has the app? Maybe there's more shopping on the web?

The more reasonable reason - There's more competition!

Black Friday and Cyber Monday just ended, giving us a good insight into which shopping app has generated the most excitement.

Spoiler alert - It's not Amazon.

I analyzed the most downloaded shopping apps in the US which include Amazon, Walmart, SHEIN, and Temu. The latter two have been advertising aggressively for quite a while now.

Collectively, downloads for the set grew 6% when comparing this November to last November. Considering the entire Shopping category was down according to the Mobile Download Index, that's a good sign.

But not all apps are enjoying that growth.

When it comes to new downloads, Amazon came in last this November. The aging king saw 1.8M downloads in November in the US, according to our estimates. And that's not it. When compared to last November, downloads are down a whopping 27%.

Moving up we see Walmart, which came in third with 2.5M downloads after growing 40% from October. But even with the bump, Walmart's downloads are still 2% lower than last November.

I think I know why, but let's continue with the results, which will make my conclusion even more clear.

SHEIN came in 2nd adding 2.8M new users from the US, according to our estimates. And unlike its US competitors, SHEIN's downloads are up a massive 26% when compared to last November. That could be another reason the company is going public soon.

And last, actually first, is Temu. The shopping app that took the US by storm with abnormal ad campaigns that push it to the top of the App Store and Google Play regularly. Temu saw 7.2M downloads in the US this November, 16% higher than November of last year.

And if you're counting in your head, Temu's downloads outpaced all three competitors combined!

So why did Amazon and Walmart slide while Temu and SHEIN rose? It's not ad spend - all companies can do that. It's all about the price.

Temu's products are dirt cheap. The reviews say they're also worth exactly that, but that's not stopping people from trying it out. SHEIN is in a very similar boat. At a time when credit card balances are exploding, debt is becoming more expensive, and Buy Now Pay Later is becoming a norm, cheaper is better.

4. Amo Used a Proven Growth Hack and It Backfired

Social apps have a pretty "standard" growth hack that's not that user-friendly but is pretty much rocket fuel for growth - They force you to invite your friends in order to use the app.

Lapse is one of the latest examples of how well that works, and what happens when you turn that off.

But there's a catch - you have to know your audience.

Amo didn't...

Amo is a weird sort of social app that lets you and your friends create very expressive profiles full of stickers and images. Sort of a messy chaotic collage of who you are.

Weird, but how are the downloads?

According to our App Intelligence. ID by amo, which is only available on the App Store, had a total of 77.5K downloads since it was released about two weeks ago. About a half came in the first two days and the trend sloped down very quickly.

Downloads have dropped under 3K per day on average.

This story isn't about another overnight success, so most of us won't get to play with stickers.

And what was meant to make it grow actually held it back. Unlike other social apps, the initial batch of users really didn't like the need to share contacts. It could be because that batch was more techy, or maybe it's because there was a lot of dislike for Lapse's requirement, but it just didn't work.

ID never took off. The growth hack failed.

A great reminder that you really have to understand and build for your audience.

5. Klarna's Worst Black Friday

Buy Now Pay Later was all the rage a couple of years ago. What's better than not having to pay for your purchases right away?

Well... Black Friday happened last week and after following this trend since 2021 I was excited to see if there's still demand for taking on debt and if so, who it's with.

Let's start at the top. This November, Klarna, Affirm, and Afterpay, the most downloaded BNPL apps in the US, saw a total of 2.4M downloads from the US, according to our estimates. This is a bit lower than last year's 3M but higher than 2020's 2M.

It's important to note that downloads across the entire shopping category are down this Black Friday vs 2022. According to the Mobile Download Index, the Shopping category on the App Store dropped 29 points, and the trend on Google Play is very similar.

Klarna, the rising star back in 2021, scored the lowest number of new downloads in the US this November. Our estimates show 693K downloads for Klarna - almost half of what Klarna saw in 2021, which was its biggest year.

In the US, Affirm and Afterpay led the way this year with 895K and 848K downloads, respectively, according to our estimates. Although downloads of all three dropped when compared to last year, it's Afterpay that dropped the least this year.

I don't expect much to change as we head into December.

App Intelligence for Everyone!

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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.