The downloads of meditation apps sky rocketed hitting a $2 billion valuation in December 2020 after raising $75 million in Series C financing. The Covid lockdowns catapulted meditation (app) companies like Calm into the minds of users and investors. A mind boggling valuation of $2 billion dollars was put on the company with approximately 400 workers.
However now, Calm has recently announced app downloads and user sessions are declining. What does this mean for the Meditation industry and people meditating?
Calm App mind expanding growth during the pandemic
During Covid a lot of people were suffering from poor mental health. They were stuck inside, and locked in their homes for extended periods of time. This was anxiety inducing for a lot of people, who felt very restless and even slightly claustrophobic being pent up indoors for so long. On top of this there was very little socialisation, and a lot of screen time. People could only exercise from home, there was also many deaths. People were reminded of their mortality and couldn't escape their mental noise. As a result of this, there was huge downloads of meditation apps, and meditation companies like Calm sky rocketed in size and profits. They became the big players in Silicon Valley and one of the top companies in the world.
There was no distractions, people were left to themselves, and they turned to downloading meditation apps. Businessmen saw this as a great opportunity. They could commercialise people doing meditation. They brought in celebrities like Harry Styles to do voice overs, and even created their own merchandise to sell.
They gave customers on the apps lots of different options from movies, to bedtime stories read by celebrities, to merchandise like meditation pillows and blankets.
They made meditation highly commercialised, which is very interesting because it isn't a market one thinks of as hugely profitable, however Calm clearly did and succeeded. Their revenue soared and they quickly became one of the fastest growing companies in the world.
Meditation Apps contemplate fall in engagement
Calms growth has taken a turn in 2022. With the end of covid restrictions, people are returning to in-person meditation classes, and cancelling meditation app subscriptions, downloads to apps like Calm and rival Headspace have fallen sharply.
According to data from app experts Apptopia, sessions of top apps such as Calm and Headspace were down 26% and 60%, respectively. User sessions of the top 10 meditation apps fell sharply by 48% in Q2 2022 compared to the same period in 2020. That's a huge drop.
More alarmingly over the last 90 days (up to August 2022) apps in the Meditation space have seen a 30% drop in engagement. This translates into less revenue (although it's still growing in the first half of 2022).
Now that inflation is kicking in people are cutting their daily living costs and subscription services like Netflix, Calm, and these companies are taking a hit.
Calm must be seeing big drops in their revenue and profits going forward if they are having to fire over 60 employers.
Calm lays off 20% of its workforce
Sacking employers is the last thing they want to do in an expansion period, however Calm has recently done this, and announced they will be firing employees to streamline their business project. This involves cutting down on the number of new projects they are doing, like the celebrity bed-time stories and return to focusing on the fundamentals.
Calm may be looking to cut the cost of their service for consumers. They can do this by streamlining their company's operations. This will mean a simpler service but for a cheaper price. Although it may look bad for Calm having to fire over 60 employers it must be noted that the meditation industry is growing. In fact, searches for meditation classes, and guided meditations are growing exponentially online. However, with increasing demand there is also increasing competition with new companies entering the market. This could an opportunity or a recipe for disaster for Calm who will have to make tough decisions in the coming months.
The thing is if revenues are still growing are there underlying factors which has prompted CEO David Ko to quote "We as a company are not immune to the impacts of the current economic environment."
Calm and others could be looking into the abyss of nothingness.
Calm and other meditation app developers are now battening down the hatches.
Bottom line is people are going back to in-person meditation classes or just finding other outlets to mindfulness, or just can't afford the paid for apps.
The desire for meditation hasn't faded away. Instead, it has gone up this year according to Google research.
Now is the time for companies like Calm to really cement themselves in the meditation market or see themselves quickly fading into the abyss of nothingness.
With in person classes back, and much more on the market for consumers it will be a tough challenge for Calm, and hopefully they will be able to put their meditative teachings into good practise, and remain calm throughout this storm.
The bottom line is keep Calm.
Apptopia Calm analysis