In fact, a recent report found that AI-powered applications have higher user churn rates than their non-AI equivalents. These results indicate that AI apps constitute a significant share of the app market. They fail to retain users in the near-term and over time.
At present, AI applications are comprising 27.1% of all applications in every category. Even with this ubiquity, a shocking discrepancy appears in retention statistics. Monthly retention rates for AI apps are just 6.1% versus 9.5% for non-AI apps. AI apps leave a retention rate of 21.1% annual. This is well below the 30.7% retention rate of non-AI alternatives.
According to the report, AI apps come out on top in terms of weekly retention. They impressively reach a standard of 2.5%, while non-AI applications don’t even compare, only reaching 1.7%. Even this one shining success seems too little to counterbalance the general retention issues that plague AI apps.
On the financial performance side, AI applications have a greater realized lifetime value (RLTV). The MGI report finds that these AI apps produce an honestly incredible monthly RLTV of 39% or higher. Additionally, they’re keeping an astonishing annual RLTV of more than 41%, averaging $30.16, compared to non-AI apps which average just $21.37. AI Monthly Average Revenue per App $18.92 Apps without AI $13.59
Even with these financial benefits, the subscription model for AI apps is a deeply disturbing phenomenon. Users cancel their annual subscriptions to AI-powered apps 30% faster than non-AI apps. Yet this trend raises an acute red flag when it comes to user satisfaction and ultimately, long-term commitment. The report points out that weekly subscriptions aren’t the user’s choice of subscription type with last-minute AI app users.
RevenueCat tells us that this all leads to increased volatility in realized revenue. More importantly, it brings their user value, user experience and longevity into question.
Sarah Perez is a veteran reporter at TechCrunch, having joined the site in August 2011. She hails from banking, retail and software sectors, which uniquely equip her to tackle these changes. She was at ReadWriteWeb for more than three years before coming to TechCrunch. You can reach Sarah directly, by email at sarahp@techcrunch.com, or via encrypted messaging app at sarahperez.01 on Signal.
The app market has changed tremendously since we first released the app. This report underscores the urgent call for developers and marketers to look beyond short-term impacts to user retention strategies. Nearly one in four applications employs AI at this point. To further improve growth and user happiness, we need to overcome retention hurdles in this battlefield of competition.