Sub Club Podcast: The Boom In Non-Game App Revenue And What’s Driving It

Guest: Olivia Moore, AI Partner at Andreessen Horowitz
Hosts: David Barnard, Jacob Eiting
Date: February 27, 2026

Episode Overview

This episode explores the explosive growth in non-game app revenue, dissecting what’s fueling the boom and how the evolving app ecosystem is capitalizing on AI and new monetization strategies. Olivia Moore of Andreessen Horowitz joins to discuss the data, the impact of generative AI, broader trends in consumer willingness to pay, and the accelerating innovation cycle in subscription apps.

Key Discussion Points & Insights

1. Non-Game App Revenue Surges Past Games

[01:56 – 02:26]

• For the first time, revenue from non-game app in-app purchases has overtaken games—a reversal from a 6:1 gap a decade ago.
• Olivia highlights, “Consumer application in app purchases finally passed games. And like a decade ago it was like six to one the other way” (Olivia Moore, 01:56).
• The change is described as “a really big and meaningful shift…very exciting to see.”
• Growth is widespread, not just in AI—billions in increased revenue across categories like movies, TV, social media, and utilities (02:26).

2. AI’s Role and the Wider Growth Story

[02:26 – 04:56]

• Generative AI drove $3.5B in new revenue, but most of the increase is broad-based.
• AI has made product building and marketing more efficient (the “vibe coding” trend), allowing more features and lowering production costs.
• Short drama apps are cited as an example: “They're making, you know, hundreds of millions of dollars now...largely using AI to either fully generate or edit these short dramas.” (Olivia Moore, 03:04)
• Olivia: “AI in app purchases were up something like 3x year over year…still so early.”
• Only ChatGPT cracks the top 10 apps by saturation in any age group; most top apps remain the household names: YouTube, Instagram, Spotify, Amazon, etc. (04:56)
• David: “ChatGPT obviously had a banner year, but…for female, ChatGPT doesn't even make the top 10.” (David Barnard, 04:56)

3. Consumer Willingness to Pay and Monetization Innovation

[05:56 – 08:49]

• The “anchor” price has shifted: pre-2023, consumers weren’t very willing to pay for apps, apart from outliers like Calm or Duolingo.
• ChatGPT’s $20/month subscription altered expectations, increasing willingness to spend at higher price points.
• Usage-based pricing creates new “whales”—some users pay hundreds, even thousands per month.
  • “ChatGPT anchored a lot of people on $20 a month, if not more. And when you incorporate usage based pricing, you can have whales…paying, you know, hundreds of dollars, if not thousands...” (Olivia Moore, 06:24)
• App companies are capturing more value through perfecting price segmentation (ads, multiple subscription tiers, usage-based upsells).
  • Olivia: “We are getting closer to being able to perfectly price segment users and…increase the value that these products could capture.” (07:56)
  • Grindr referenced as offering a several-hundred-dollar “AI that swipes and makes matches for you”—not for most, but valuable to a small segment (07:56).

4. Average Revenue per User (ARPU) Doubles in AI Apps

[08:49 – 09:31]

• Top 50–100 AI apps are monetizing at 2x the pre-AI ARPU.
• AI consumer businesses are ramping revenue faster than enterprise AI plays—a historical reversal.
  • “Consumer businesses are ramping revenue faster than enterprise businesses, which I think has never before been true…” (09:31)

5. The Investor’s Perspective: Scale and Durability

[09:31 – 13:06]

• Investment-worthy apps need the potential for multibillion-dollar outcomes.
• Olivia warns fast growth is often subsidized by cheap AI model costs—“giving away dollars for pennies.” The economics must eventually work (parallels to on-demand startups like Uber/DoorDash).
  • “A lot of startups now are achieving really fast growth by essentially subsidizing the model cost to the end consumer…unit economics catch up to you eventually.” (10:06)
• Competition from model providers (OpenAI, Claude, Gemini) is intensifying; startups must carve out “opinionated” verticals and productize deeply.
  • “We're looking for teams that…build out and productize the models in a way that it's much more compelling, easy to use, more effective than what like a broad-based LLM platform will do.” (Olivia Moore, 11:54)

6. Durability of Use Cases and Building for the Next Era

[11:29 – 14:53]

• Novelty apps can burn bright and fizzle (cites BeReal).
• Durable businesses offer real value and are integrated more deeply into user workflows.
• Olivia references Gamma (AI-powered presentations) as a startup with defensible value—offers something LLMs or general platforms can’t easily replicate.
• Reimagining traditional services, like fitness or mental health, for the AI era can open up new use cases.
  • “What's a…rethink of what a personal trainer could be…instead of bolting an AI experience onto an existing fitness app?” (David Barnard, 13:06)
• Olivia: “AI is now like allowing you to reimagine how to build a different experience or how to let the consumer build their own experience…” (14:53)

7. AI as an Accelerant—Operating Leverage and Speed

[14:51 – 16:24]

• Teams are smaller, productivity is exponentially higher (companies with $1M+ ARR per employee).
• Product, marketing, and engineering cycles are dramatically faster.
  • “We’ve seen and invested in companies that are doing a million plus in ARR per employee, which is just like kind of a crazy metric…” (Olivia Moore, 15:16)
• Anticipates a continued rise in efficiency; the era of the “one-person, $1B company” may be near.

Memorable Quotes & Moments

• “Consumer application in app purchases finally passed games. And like a decade ago it was like six to one the other way.”—Olivia Moore, 01:56
• “ChatGPT anchored a lot of people on $20 a month, if not more.”—Olivia Moore, 06:24
• “App companies are capturing more value…perfectly price segment users and…increase the value that these products could capture.”—Olivia Moore, 07:56
• “The fact that they're monetizing it all so early is…exciting.”—Olivia Moore, 08:49
• “Consumer businesses are ramping revenue faster than enterprise businesses, which I think has never before been true…”—Olivia Moore, 09:31
• “A lot of startups now are achieving really fast growth by essentially subsidizing the model cost…unit economics catch up to you eventually.”—Olivia Moore, 10:06
• “We're looking for teams that…build out and productize the models in a way that it's much more compelling…than what like a broad-based LLM platform will do.”—Olivia Moore, 11:54
• “We’ve seen and invested in companies that are doing a million plus in ARR per employee, which is just like kind of a crazy metric…”—Olivia Moore, 15:16

Recommended Apps to Explore (Olivia’s Picks, 16:47)

• Wabi – Create your own mini apps or use those created by others.
• Gizmo & Sakai – Build games in a TikTok-like feed.
• Poke & Tasklit – Text with AI outside of a dedicated app.

How to Contact Olivia Moore or Andreessen Horowitz

• Olivia Moore on Twitter: @omoretweets (17:48)

Summary Takeaways

• Non-game app revenue is booming, now surpassing game apps for the first time.
• While generative AI powers a significant portion of growth, much is happening in verticals unrelated to AI.
• Consumer willingness to pay is up sharply; higher tiers and usage-based pricing are unlocking new business models.
• Investor perspectives focus on the durability and verticalization of apps, and on defensibility as model providers get aggressive.
• AI is enabling far greater efficiency, smaller teams, and new forms of products and workflows—reshaping the app landscape at unprecedented speed.