This Week in Apps - Seasonal Surprises

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. Is the Meta Quest Still in Demand Now that Apple's Vision Pro is Right Around the Corner?

2023 was an interesting year for virtual reality headsets. Meta's Quest was the popular option coming into the year but then Apple announced the Realty Pro, making the Quest feel like a toy.

I've analyzed Quest sales by tracking downloads of its companion app over the last few years, as Christmas is the Quest's biggest day of activations, and this year was no different.

The real question is, are people buying the Quest or waiting for the Vision Pro?

Let's have a look at the downloads.

According to our App Intelligence, the Meta Quest app was downloaded 1.8M times from the App Store and Google Play this December with most downloads coming in on Christmas day. That's a modest 3% increase from last year, so things are still growing.

60% of the downloads came from the App Store and 40% from Google Play, which lines up with previous years, and also means the Vision Pro hasn't crushed the Quest yet.

But things look a little different when we zoom out. Our estimates show Meta Quest was downloaded 6M times in all of 2023, marking a substantial decrease from 9M in 2022 and 7M in 2021.

Maybe the Quest is just failing to maintain its momentum?

I'm not bullish on VR headsets just yet, personally, but that's mainly because I don't have any practical use for them. Let's see how things change when Apple starts shipping headsets in a few months.

2. Forget Selfies, Digital Picture Frames are This Year's Surprise Holiday Hit

Selfie apps have been a dominant trend in apps for a couple of years now, and this holiday season I found a similar trend - and it includes sharing photos but not to other phones.

Digital picture frames saw a massive surge in sales this holiday season, which is evident by the downloads of the companion apps needed to activate them.

Frameo and Aura Frame are two companion apps that made it to the top charts this holiday season.

In case you're unfamiliar, digital frames allow you to share photos from your phone into a digital screen - a great gift for new grandparents.

But probably more than just grandparents because the two saw 1.9M combined downloads in December, up 58% from 2022. Frameo led the way with 1.2M estimated downloads and Aura frame with 700K.

Aura's downloads rose 17% from last year while Frameo's downloads doubled!

I couldn't find any notable news about either, leading me to believe this growth wasn't a result of some new shiny tech (even though Aura mentions AI). Instead, it's a part of a growing trend to detach from our phones and bring more things IRL.

If that's the case, what's next?

3. Amazon Alexa's Worst Holiday Season So Far

AI dominated much of 2023 thanks to ChatGPT, but if we look back to previous years, talking of AI usually meant "smart" home assistants like Amazon's Alexa.

Like the Quest, sales of smart home assistants from Amazon and Google spike in December as evident from the downloads of the companion apps needed to activate them.

Alexa has been growing year after year, but this year, things are different...

According to our estimates, the Alexa app has been downloaded 4.6M times from the App Store and Google Play in December. Google Home was behind it with 3.5M downloads.

That's a lot of home assistants! But... it's actually the lowest December since 2018 for Amazon and the lowest since 2019 for Google. And the trend is not looking healthy either.

Alexa is down 27% from last year and Google is down 29%. While Alexa's downloads still had a small spike but Google did not. I haven't seen any real ads for "hey Google" lately which might explain that.

Zooming out, Google has been on the decline since 2020, so this isn't a big surprise. Alexa has been growing pretty consistently since 2020, even though Apple's HomePod (and later Mini) were around.

To me, this decline isn't a result of competition but rather innovation. Lack of innovation in this case.

Home assistants like Alexa used to be "AI" as far as most were concerned. I mean, what's "smarter" than a thing that can recognize what you say and reply? But then ChatGPT came out and showed everyone AI can do quite a bit more.

And if you think about it, Alexa hasn't really evolved much since it came out. Sure, Amazon added a variety of shapes and a clock, but in terms of being helpful, not much has been added beyond some niche functionality.

I think the drop in downloads is a direct representation of that lack of innovation, and also a potential opportunity for competitors. The AI Pin from Humane comes to mind. I have my thoughts on its viability and usefulness, but those aren't relevant in this case because good or bad, it is a competitor. More will come.

I'll leave you with this - 18M people downloaded ChatGPT in December. More than twice the number of downloads for Alexa and Google Home combined.

4. Duolingo is Speaking the Language of Success - Here are the Numbers

It seems like everyone was trying to learn a language in 2023, and there's one app at the center of that - Duolingo!

Duolingo had a magnificent year in terms of both downloads and revenue, reaching new all-time highs for both.

Let's have a look at the numbers.

According to our App intelligence, Duolingo's net revenue in 2023 rose to $339M. Net means what's left after Apple and Google take their fees.

That's a 57% increase when compared to last year's revenue and a whopping 2,725% increase when compared to 2018!

There are no surprises when we look at where the revenue is coming from - 70% came from the App Store and 30% from Google Play, which is very common for revenue. And the biggest country, by far, is the US with 51% of the revenue in 2023.

According to our estimates, the UK, Germany, Canada, and Japan round out the top 5 countries. Each with a single-digit share of the revenue. No other country has a double-digit share.

And it's not just the revenue.

Duolingo saw 134M new downloads in 2023 from the App Store and Google Play, according to our estimates. That's 30% higher than 2022's haul and 179% higher than 2018's. Not nearly as high as revenue but very healthy for an established leader.

Looking at revenue in the context of downloads one thing is clear, in addition to growing downloads, Duolingo's big achievement is how well it's able to turn downloads into revenue and how to turn revenue into more revenue.

Part of that growth is a new tier Duolingo that brings AI (with ChatGPT) to language learning called Max. It also happens to be Duolingo's most expensive plan.

I expect to see even more growth in 2024. Or, in the most studied laguage on Duolingo (after English), ¡Vamos!

5. Peacock's Revenue Nearly Doubled in 2023 - How Does it Compare to the Rest?

The streaming race, which I foolishly called over back in 2022, is far from finished.

2023 was a busy year for the top streamers. HBO Max rebranded and consolidated with discovery+, Disney is eating up Hulu, Paramount+ is growing steadily, and Peacock is just hitting it out of the park.

I rounded up the top streamers, which include Max, Disney+, Peacock, and Paramount+ and compared their downloads and revenue to get a better idea of the trend and to try and figure out what's coming in 2024.

FYI - This analysis is focused on the US because Peacock and Paramount+ aren't available anywhere else.

Our estimates show that in the US, combined revenue of the four rose 35% in 2023, ending the year with $1.8B of net revenue - what they get to keep after Apple and Google take their cut.

While impressive, this number doesn't really tell the full story because not all streams grew equally this year. Quite the opposite!

While Max led in revenue, it's Peacock's revenue that grew the most in 2023 - a whopping 80%. Yes, I looked at the numbers twice to be sure. Can you guess why?

Paramount+ was the second fastest grower with more-than-healthy 55% revenue growth in 2023. Disney+ followed, growing a nice 35% from 2022's numbers and Max comes in last place growing just 16% year over year.

Yet, Max was the highest earner in the US, with $672M of net revenue from the App Store and Google Play. Second place Disney+ was close with $524M of net revenue from the US.

I attribute Peacock's growth to content. Peacock has been hard at work making sure there are more than enough reasons to get its app - from sports events to TV shows and movies, something no other streamer has been too good at in 2023.

Paramount+ is also trying. It isn't as good, but Peacock set the bar pretty high.

HBO and Disney are growing despite their lack of focus on content. Sure, they are releasing more content, but not nearly as much as they had when they first launched and the new content is not nearly as broadly exciting as it used to be.

Here's something fun to consider - if Peacock and Paramount+ combined they'd earn more than DIsney+ and get very close to Max. I don't see that happening anytime soon, but you never know.

The streaming race has moved from the need to get the download to the need to convert a free user to a paying user. Content wont the first time around and I fully expect it to win now again.

Why do I say this?

Let's have a look at new downloads and you'll see.

Downloads are a whole different ballpark where we see some contraction. That means fewer downloads year over year.

Peacock, which leads the way in revenue growth saw fewer downloads in 2023 than in 2022. Yes, fewer downloads yet more revenue, reinforcing my theory that the streaming race has moved to conversion from acquisition. Disney+ is in a similar boat.

Max and Paramount+ saw downloads increase in 2023 growing 45% and 9%, respectively. Our estimates show 32M new downloads for Max. To me that combined with the minimal revenue growth indicates the brand and marketing behind Max are working very well to get new downloads but the lack of content isn't converting those downloads into paying users. Not long-term users.

Disney's and Peacock's downloads slowed down in 2023 dropping to 16M and 19M, respectively. Yes, Peacock is getting more downloads than Disney+ in the US, which I found surprising.

But here's something interesting - although the two saw big download drops of 20% and 30%, respectively, the two earned more indicating their content (and paywalls, sure, but mainly content) is not only driving more upgrades but is also retaining users longer.

Thinking out loud, it makes sense that TV content would have stronger retention than movies, especially blockbusters, because it's continuous. Paramount+ has that as does Peacock. Max has that too but not enough, which is probably why it merged with discovery+ back in May and likely why Disney+ is merging with Hulu.

I'm not expecting any surprises in this arena this year - just growth. Let's see if that's the case.

And that's all I have for you this week. Happy new year!

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.