Are there opportunities for Chinese products in the meditation market valued at $9 billion?

Before looking at the overall situation of the overseas meditation market, let's first understand what meditation is. Meditation, originally derived from the spiritual training of Buddhism and Hinduism, allows oneself to enter a deep state of tranquility through sitting quietly, observing one's own breathing, imagining artistic conception, etc., in order to enhance spiritual awareness and improve one's own state. A Zhihu answerer's explanation of meditation is very intuitive. If everyone is a large computer, then the human brain is the CPU. After the CPU has been running for a long time, it needs to "clear memory" or "upgrade the system", and this is the role of meditation, helping the brain to clear all kinds of distractions and negative emotions.

After entering the modern era, people's pace of life has gradually accelerated and psychological pressure has increased. Under such circumstances, meditation began to strip off its mysterious religious color, enter the lives of contemporary people, and gradually formed an industry with a high ARPU value.

From a product perspective, current meditation products mainly include mobile apps, books, and related products (such as meditation cushions).

From the user's perspective, the user group of meditation is relatively small. According to a survey by Market Research, the typical user group of meditation is middle-aged women with higher education . Another survey shows that among 200 world-class leaders, 80% have the habit of meditation. Steve Jobs, Arnold Schwarzenegger, Bruce Lee and others are all meditation enthusiasts. This roughly shows the user portrait of meditation products. The audience is basically middle-aged, has clear career goals and has achieved certain results.

It is precisely this user portrait that determines that this niche market has a higher income. For example, the United States, the world's largest meditation market, had a market size of US$1.21 billion in 2017 and is expected to reach US$2.08 billion in 2022.

Of course, the huge meditation industry is composed of product types such as books, workshops, meditation services, and online products. Among them, the most popular in recent years are meditation apps. According to Sensor Tower data, the annual compound growth rate of revenue of the top 10 meditation apps from 2015 to 2019 was 121%.

High ARPU value + growing revenue make the overseas meditation app market seem very attractive. So is there any opportunity for Chinese developers in this market? Let's take a look at the overall status of the overseas meditation app market.

Through data analysis and observation of leading products, the author found that the meditation market mainly presents the following three characteristics.

The penetration rate of online mobile products in the entire meditation industry is not high

According to Sensor Tower data, the total revenue of the top 10 meditation apps in 2019 was $195 million. Given that the head effect among the top 10 products is already very obvious, the total revenue of meditation apps worldwide is probably between $200 million and $300 million. If combined with the data from Data Bridge, the penetration rate of online mobile products is about 10%. In contrast, mobile games accounted for 46% of the total revenue of the gaming industry in 2019.

The low penetration rate has two sides: first, meditation apps may still have a lot of room for development; second, users may have a greater demand for meditation offline. We will discuss this in the "Monetization Model Exploration" section.

Market structure: There are many players but the head effect is obvious

Although there are already many meditation apps on the market, only Calm and Headspace have achieved the top position. Both products rank in the top two in terms of revenue and downloads. It is worth mentioning that the combined revenue of the two in 2019 accounted for 75.8% of the total revenue of the top 10 meditation apps in the world.

According to a recent report released by Apptopia, the session duration of Calm in the United States during the epidemic was much longer than that of other products.

Business model: relying on brand marketing and monetization through subscription

The monetization model of overseas meditation apps is very simple, and several leading products mainly rely on membership subscriptions to generate revenue. In terms of price, the subscription price of US$60 per year is the mainstream price.

Perhaps because of their niche audience, most meditation apps do not rely on advertising to buy traffic. According to statistics from AppGrowing International, Calm, which had the most advertising in the world in May, only launched 297 advertising materials. For leading products such as Calm and Headspace, marketing is more about building brand image through cross-border cooperation with well-known celebrities or brands, thereby attracting more users to pay for subscriptions.

For example, Headspace became an official partner of the NBA and set up a section called Performance Mindset, which includes interviews with four basketball stars about meditation. Calm also has audio courses from NBA star James.

Combined with the above three characteristics, meditation apps in overseas mature markets do have a very high growth rate, but at the same time, the market's head effect is obvious. In this case, if Chinese developers want to enter the mature market, they need to differentiate themselves. However, after experiencing a number of Chinese meditation apps, I found that there is no obvious difference in usage from overseas apps. In terms of monetization methods, domestic now meditation has made some innovations.

When observing mobile apps in the Chinese and overseas markets, we often find that in terms of monetization, the former always has a variety of ways. And the content provided by meditation products is mostly "audio companionship". Based on this, the "transformation" of now meditation also starts from monetization.

The first point of difference for now meditation is the additional charges beyond the subscription.

Image source: Product screenshot

Now Meditation Courses with Additional Fee

Now Meditation has set up training camp activities such as "Expanding Classroom" and "Mindfulness Academy", offline classes and live classes. Even if you have subscribed to membership, you still need to pay extra to participate in these activities, but the registration price for members is lower than that of ordinary users. From the perspective of payment points, the charging model is still very different from the way overseas meditation apps enjoy all services with one member. According to the subscription methods of overseas products with knowledge payment attributes such as Masterclass, the payment habits of foreign users are simple and direct one-time purchases. This relatively complex payment method may be contrary to the payment habits of overseas users. If you go overseas, you still have to adapt to local customs.

Judging from the course content, the selling points of the training camps and other courses set up by Now Meditation are "systematic" and "quick", which obviously caters to Chinese people who are new to meditation and want to get started. However, when meditation has been accepted by a small group of people overseas, quick learning itself conflicts with the concept of meditation.

In addition, offline classes are also offered in the mindfulness academy of NOW Meditation. It is worth considering whether this model of linking online apps with offline courses can work overseas.

Because as mentioned above, the overseas meditation market is large but the penetration rate of mobile terminals is not high, largely because users in mature markets are still accustomed to meditating with many people in offline meditation studios. According to statistics, there are 2,450 meditation studios in the United States, generating a total revenue of approximately US$660 million. In addition, there are many "meditation rooms on trucks" in the United States, which save rent compared to ordinary meditation studios and their movable features can bring meditation to every corner of the city. If now meditation can attract such a large number of offline meditation groups to online through offline courses, it is certainly worth trying, but the key is whether the experience of offline meditation practice overseas can be replaced by meditation apps. This requires looking at why overseas users like to participate in offline group meditation.

In this regard, the author found a question on Quora called "Is it better to meditate alone or in a group?" The respondents basically prefer group meditation. From the answers, we can roughly summarize the advantages of offline group meditation: building interpersonal relationships, making it easier to seek help from peers and teachers, and improving concentration.

From these answers, we can see that the social and interactive attributes of offline group meditation are important reasons for users' acceptance, and these are irreplaceable by online experience. Just like fitness apps cannot replace gyms, meditation apps cannot replace offline meditation studios in markets with a high level of meditation industry development. Therefore, it can be inferred that it is difficult to bring users who have developed offline meditation habits to online.

There are two other ideas that can be considered. One is to add social functions to the product, such as cloud meditation for multiple people at the same time, similar to integrating Zoom into the App. The rapid popularity of Zoom is that it has lowered the threshold for people to make video calls. There is no need to download the App or register an account. You can use it with a URL. However, Zoom has led to the popularization of video communication functions. The extension of video communication to various vertical industries is a major trend. Another example is not limited to the role of providing content in most American products, but to have more platform attributes and invite teachers to provide help to students.

Another idea is to make content-integrated products. For example, the fitness industry in the United States is relatively developed, but a certain user has a cognitive threshold for the gym experience, and fitness needs are diverse and changing. There are apps that go to gyms to discuss cooperation, allowing users to enjoy courses in different gyms through the app. The same is true for meditation. Users may need several experiences to find suitable companions and teachers, or changes in residence and work will also have some impact. Even the movement tracking of mobile meditation studios can be a point of entry into the market. It’s just that the second idea requires too much localization and the threshold is relatively high.

Now Meditation's last monetization method is e-commerce. Now Meditation has opened a shopping mall section, but currently there are only 12 products in total, mainly sleep aids, and its e-commerce attempts are also in the initial stage.

However, this model of selling related products in vertical apps still has great potential in the United States. On the one hand, some vertical products in the United States have started e-commerce based on their original business. For example, Fishbrain, which originally marked fishing spots for fishing enthusiasts, launched an e-commerce section last year to sell fishing equipment. These vertical platforms have established their own e-commerce businesses, which to some extent proves that American users accept this model; on the other hand, since the ARPU value of meditation users is relatively high, they also have higher consumption potential. Therefore, after a meditation app has formed a certain user scale, joining e-commerce would be a business point worth trying.

Of course, in terms of content, natural sounds, ASMR, bedtime stories, and celebrity courses are what the leading product Calm is already doing. How to select and combine them is related to the developers themselves and the target audience.

Compared with mature markets, the cost of meditation products entering emerging markets may be lower, because users in emerging markets are exposed to meditation later, and there is still a lot of room for market changes. However, the problem with emerging markets is that the ARPU value is not high, so the strategy of positioning products for niche groups like in mature markets is not feasible. Only by expanding the audience range can it be possible to gain benefits.

In this case, the low-price strategy may be applicable in emerging markets. For example, Meditopia, which is priced much lower than the subscription price of mainstream products on the market, focuses on emerging markets. It has the highest number of downloads in Brazil and currently ranks second on the Brazilian Google Play Health and Fitness download list. It is also in the top 100 on the Google Play best-selling list. Therefore, it can be proved that the low-price strategy is still applicable for meditation apps that want to enter this emerging market.

However, not every user in emerging markets has the habit of meditation. After analyzing the market distribution of four popular products, it was found that emerging markets are mainly concentrated in Brazil, India, Mexico and Russia.

According to data from AppGrowing International, Meditopia, which focuses on emerging markets, has placed advertisements in Brazil, Russia, and Mexico, but not in India. In fact, this is related to India's national conditions. India is a country with a large gap between the rich and the poor, and the caste system has greatly restricted the personal prospects of many people. Therefore, most Indians lack goals and naturally do not feel anxious, so they will not become the target audience of meditation apps. Therefore, although the download volume of Indian meditation apps is not bad, the main audience is still a small number of middle- and upper-class people, and the potential for expanding the user group is limited. For meditation apps, India is not a very valuable market.

To sum up, there is a lot of room for meditation apps to grow in mature markets, and if they can bring differentiation, there is still hope to enjoy dividends; but in emerging markets, there are more problems to be faced. Not only should the subscription price be appropriately lowered in countries where meditation habits exist to ensure the expansion of the user base, but it is also necessary to delve into the social background of the country to see whether users in this market feel anxious about crossing classes. Don't mistakenly focus on markets that seem to be very valuable but actually have little growth potential.

via White Whale Out to Sea