Mobile App Revenue Outlook Healthy Despite Slowing Download Volumes and Smartphone Growth, – IDC

Mobile device users installed nearly 156 billion mobile applications worldwide in 2015, generating $34.2 billion in direct (non-advertising) revenue. A new forecast from International Data Corporation (IDC) estimates that these figures will grow to more than 210 billion installs and nearly $57 billion in direct revenue in 2020.

While the market will continue to grow throughout the forecast period, IDC expects to see slower growth in both application install volumes and direct revenue over time. This trend, which is largely driven by market maturation, will see annual install growth fall into the single digits over the second half of the forecast. Mobile application install volume will still experience a five year compound annual growth rate (CAGR) of 6.3%. Meanwhile, direct revenue from mobile applications will also experience slower growth by the end of the forecast period, although the five year CAGR will remain in the double digits at 10.6%.

Apple’s App Store “ecosystem” captured nearly 58% of global direct app revenue in 2015, an increase of 36% year over year. Meanwhile, Apple’s share of global app install volume was only 15%, down nearly 8% year over year. The sheer volume of Android-based devices in use ensures a greater overall number of installs through Google Play, which captured about 60% of install volume and nearly 36% of direct revenue in 2015. Although Google Play enjoyed solid year-over-year growth in both downloads and direct revenues, the gains were somewhat lower than in previous years. Apple is expected to continue outperforming Google Play in terms of revenue generation. However both ecosystems are more than sufficiently established to sustainably attract developers.

“While they provide a convenient measure of the mobile app economy and its beneficiaries, we caution that preoccupation with download/install volumes and associated direct revenue may miss the thrust of changes in the mobile marketplace,” says John Jackson, Research Vice President, Mobile and Connected Platforms. “Facebook and Google continue to dominate mobile ad spending thanks to the scale and sophistication of their network effects, with Facebook’s moves to incorporate news and other interests into its experience will likely pull traffic and install volumes away from discreet apps. Similarly, the emergence of ‘bots’, which seek to automate interactions in a contextually infused way, are another in a series of examples of value being created above the OS layer and even above the app.”

The IDC study, Worldwide Mobile Applications Forecast, 2016-2020 (Doc #US41100816), provides historical data and a five-year forecast for mobile application install activity and direct revenue at the worldwide level and for 63 countries. Similar data is presented for the Apple App Store and Google Play ecosystems. The report also discusses significant market developments, key market drivers and inhibitors, and provides guidance for mobile application providers.

For more information, visit:
http://www.idc.com

Follow IDC on Twitter at @IDC.

Source: IDC