Google and Alphabet CEO Sundar Pichai’s trip to Congress to answer questions from the House Judiciary Subcommittee on its digital advertising dominance is indicative…
When it comes to mobile app stores, we’ve come to expect big numbers. Apple’s app store alone has 900 000 active apps and has served 50-billion downloads since going live in 2008. The latest set of app store numbers from research house Gartner though, show just how massive the app business has become.
According to Gartner, mobile app stores will see annual downloads reach 102 billion in 2013, up from 64-billion in 2012. Revenue from those apps meanwhile is set to hit reach US$26-billion, up from US$18-billion in 2012.
“We expect strong growth in downloads through 2014, but growth is forecast to slow down a bit in later years,” says Sandy Shen, research director at Gartner. “The average downloads per device should be high in early years as users get new devices and discover the apps they like. Over time they accumulate a portfolio of apps they like and stick to, so there will be moderate numbers of downloads in the later years.”
If you’re thinking that most of that revenue is expected comes from paid app downloads, then you’d be right in the short-term but it’s worth remembering that free apps will account for 91% of total downloads in 2013. Indeed, in-app purchases (IAPs), which many free-apps depend one will account for 48% of app store revenue by 2017, up from 11% in 2012.
In app purchases will drive 17% of the store revenue in 2013 and increase to 48% in 2017. However, as with downloads, in app purchases are expected to have strong growth in 2013 and 2014 and slow in later years.
Gartner reckons this is down to smart devices reaching more mass-market consumers whose willingness and/or affordability to spend is lower than early adopters. The research house also says that in app purchases contribute to a significant amount of Apple’s App Store revenue from iPhones worldwide. Other platforms have not reached such high levels as the iPhone, but analysts expect they will also see IAP contributions increase in the future.
“Free apps currently account for about 60% and 80% of the total available apps in Apple’s App Store and Google Play, respectively,” says Brian Blau, research director at Gartner. “iOS and Android app stores combined are forecast to account for 90% of global downloads in 2017. These app stores are still increasingly active due to richer ecosystems and large and very active developer communities. However, we expect average monthly downloads per iOS device to decline from 4.9 in 2013 to 3.9 in 2017, while average monthly downloads per Android device will decline from 6.2 in 2013 to 5.8 in 2017. This relates back to the overall trend of users using the same apps more often rather than downloading new ones.”
“We see that users are not put off by the fact that they have already paid for an app, and are willing to spend more if they are happy with the experience”, Blau adds. “As a result, we believe that IAP is a promising and sustainable monetization method because it encourages performance-based purchasing; that is, users only pay when they are happy with the experience, and developers have to work hard to earn the revenue through good design and performance.”