Amazon Alexa Skill Growth Has Slowed Further in 2020
- Total Alexa skills now exceed 77,000 in the U.S., 37,000 in the UK, 34,000 in India, and over 25,000 in Australia and Canada
- However, the growth rate of new Alexa skill introductions has plummeted in each of these countries over the past two years which suggests lower developer enthusiasm for the platform (a trend also confirmed by Voicebot’s annual survey of voice app developers)
- Amazon has said publicly that there are over 100,000 unique Alexa skills globally and the company has indicated in numerous messages to developers a focus in recent years on the number of quality skills over quantity
- Although Amazon has introduced developer rewards to new countries over the past two years, it has changed the allocation formula and scaled back payouts in U.S. and UK according to several sources in order to create incentives for developers to add in-skill purchasing (ISP) monetization such as one-time game packs and subscriptions
Voicebot has been tracking the number of Amazon Alexa skills and Google Actions created by third-party developers since late 2016. In July of 2019, Voicebot was the first to recognize that tracking data indicated Alexa skill growth was slowing in most global markets. It wasn’t obvious to everyone since the numbers always showed a nominal rise. However, when you evaluated new Alexa skills introduced per day in the U.S. in the first half of 2019, the rate was 58% lower than the 2018 rate. In all of 2018, new third-party skills grew at the rate of 85.0 per day in the U.S. The figure fell to 38.2 new skills per day in 2019, an annualized decline of 55%. The growth rate tells the story.
Alexa Skill Growth Declines Further in 2020
That trend has continued into 2020. The rate of new Alexa skill introductions through the first three quarters of the year was just under 24 per day for a 38% decline from 2019 and 71% from 2018. The 2020 data reflects the lowest daily growth rate we have recorded. The slow growth isn’t confined to the U.S. While every country has shown nominal Alexa skill growth, the rate of new introductions has fallen in the seven countries where we have data spanning multiple years.
New Alexa skill introductions per day in Australia, Canada, and France have fallen 31%, 43%, and 38% respectively. The rate of new skills per day in the UK was 66% lower in the first three quarters of 2020 compared to the full year 2019. Germany showed an even bigger contraction of 69% from 6.0 per day in 2019 to just 1.9 this year. Consider as well that developers were launching German-language Alexa skills at a rate of 13 per day in 2018.
India has also shown a contraction. In 2019, just over 17 new Alexa skills were being introduced each day. That figure has fallen to just 4.4 per day. It is worth noting that India’s Alexa skill growth rate was a function of both developers introducing skills specifically for the country as well as developers focused on the U.S. market cross-publishing for Indian smart speaker users. As a result, a decline in the publishing rate for the U.S. will also have a ripple effect of fewer new English-language Alexa skills for India.
Alexa Skill Growth Rates and Shaping an Ecosystem
Amazon made a big deal about every increasing Alexa skill counts up through early 2019 but has been less vocal about the stat since. That change is likely influenced by less impressive growth rates and also by a change in focus for the company. In 2018, Amazon began messaging to developers that quality was important and not just the total number of titles. That message was reinforced by how Amazon allocated developer rewards which are payments made directly to Alexa skill developers. Payouts are based on the usage and engagement of Alexa users with each skill. Amazon has never revealed the formula it uses for the allocation but popular skills with high user counts and frequent engagement were regularly among the top payout recipients.
The developer rewards program has continued to expand to India last year and Australia and New Zealand in 2020 while at the same time the U.S. and UK payout formulas have changed. These changes were viewed as an attempt to broaden the payouts to reach more developers and also create a new incentive for successful developers to build their own monetization income stream. This has worked as intended for Amazon in at least a few cases. The lower monthly payouts for some popular Alexa skills has led developers to create and enhance subscription and in-skill purchasing (ISP) elements.
This move is consistent with Amazon’s focus on quality Alexa experiences. Yet another Cat Facts skill doesn’t materially enhance the value of Alexa for users. An enhanced Cat Facts skill or new game that of high enough quality that users will pay for expanded access to features does make Alexa appear to be more valuable. So, declining Alexa skill growth rates is not an indication that Amazon should panic. However, it is important because new developers introduce new Alexa skills and you would want some of the existing developers in the ecosystem to add to their skill portfolio over time.
First-Party and Third-Party Skills
The big risk for Amazon is that developers become disenchanted and discontinue support for the platform. There are plenty of developers raising concerns about Amazon and Google both showing new emphasis on in-house created first-party skills over the third-party ecosystem. However, each of these companies recognizes that they would be foolish to go it alone. They will be stronger if third-parties add to the value of their voice ecosystems with unique content and services. And, there doesn’t appear to be much evidence that new first-party skills are coming out at a faster rate than previously.
The bigger question may well be around monetization. Developers will invest more in markets where they can earn high returns on their time in terms of revenue or asset appreciation. This outcome has been more elusive. There are a handful of developers that can earn hobbyist-scale rewards and a few others that can support small teams. However, no one appears to be building the next Zynga or Rovio with an exclusive focus on voice. We discussed this in Voice Insider (N.B. paywall) last week by pointing out the number of voice developers that are now porting their Alexa skills to mobile apps to reach a wider audience.
Another area where Amazon and Google still have work to do is soliciting businesses to create skills and Actions respectively. This would surely lead to voice app growth and extend the value of Alexa and Google Assistant for users.
A thank you goes out to our friends at Voxalyze for helping compile the new 2020 Alexa skill counts. The company is developing software to help voice app developers drive user growth.