App stores to generate over $100bn in revenue in five years
When apps first came to smartphones, it completely changed the ways users interacted with their devices. Mobile phones went from being just phones that could make calls and send short messages to devices that resembled miniature computers.
Apple’s App Store and the Google Play Store saw a dramatic rise in the number and quality of the apps they offered almost instantly. For many users, apps have become commonplace and they no longer hold our interest or excitement as they once did.
However in other parts of the world, smartphone adoption is just beginning to ramp up. According to the data provider App Annie, based in San Francisco, global mobile app store revenue will reach $101 billion in five years. The decreasing cost of smartphones combined with data plans becoming more accessible will enable people in developing countries to own a smartphone for the first time which will in turn lead these new users to purchasing their first apps.
The user base of smartphones and tablets will reach 6.2 billion by 2020, which is more than double the current user base of 2.6 billion. India, Indonesia, China, Mexico, Brazil and Turkey will likely see some of the strongest growth. The revenue each device generates will increase to $16.2 in 2020 as a result of an increase in spending in Europe, the Americas, and the Middle East, while there will be a slight decline in the amount spent in the Asia-Pacific region.
Apps that stream video and music along with dating apps will lead the predicted increase in spending. Better hardware and cheaper data plans will allow services such as Netflix, Spotify, Tinder and iQiyi in China to expand significantly.
Games are where a majority of users spend money on mobile apps, and this will continue to be the case, but their share of the money users spend on mobile apps will likely drop from 85 percent currently to 74 percent in the future.
It is important to keep in mind that App Annie’s projections include subscriptions to streaming services while omitting money spent on e-commerce, which includes ride share apps such as Uber and in-app advertising.
Apple is likely to retain its lead in gross revenue over the next five years. However, the Google Play Store and other third-party Android app stores will gain greater market share.
As global smartphone adoption increases it is likely that new apps and services will emerge. Smartphone ownership will also further propel the idea of a truly connected world.
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