What Is the App Economy?
Apps are driving business and creating new avenues of revenue in nearly every industry around the world. If you’re reading this right now, chances are you already know the importance of mobile. Maybe your company is still considering its digital strategy and you see an opportunity to help it with this critical process. Maybe you’ve just begun building your first app, or perhaps you're working toward rounding out a portfolio of apps.
Wherever you and your company are with mobile, the App Annie Academy will walk you through every stage of the app lifecycle, from planning your app’s features to creating an icon and getting your first users. But before you conquer the world of apps, you need to know the size and scope of the world you’re entering.
In this topic, we’ll give you a big-picture overview of the global app economy, looking at general trends across countries, industries, platforms and demographics.
The goal is to give you an understanding of what’s at stake and where your mobile project can fit in at the macro level.
The Scale of App Usage
There are literally millions of apps out there in the global marketplace. Whatever you can dream of, someone is bringing it to life in a smartphone app. And if it’s not out there yet, there’s plenty of room to try something new, different and better. Increasingly our everyday lives are navigated through apps, from how we get around to how we make purchases.
So just how popular are apps? We’ll look at this in a few different ways in this topic and others. First, a few stats about the overall app economy.
- There were approximately 90 billion downloads worldwide in 2016 across the iOS App Store and Google Play store, a 15% increase from 2015.
- Users spent nearly 900 billion total hours in apps worldwide in 2016 (Android phone total time, excluding China). This represents a 25% increase from 2015.
- Worldwide, Android phone users spent roughly two hours in apps each day in 2016.
Global Revenue Growth
With the app marketplace expanding so rapidly, it’s easy to focus on downloads as the primary indicator of the app economy’s health. But it’s more accurate to think of downloads as the mere starting point. App publishers who drive deep, sustained engagement in their apps, not just downloads, are richly rewarded.
For example (from our 2016 Retrospective report):
- In 2016, publishers worldwide were paid over $35 billion in revenue (excluding advertising) across the iOS App Store and Google Play store. This represented a 40% rate of yearly growth over 2015.
- Worldwide revenue on the iOS App Store alone grew by nearly 50% in 2016, increasing its lead as the highest revenue-generating platform.
- When third-party Android stores and advertising revenue are included, the 2016 total net-to-publisher amount increases to nearly $101 billion.
What does this tell us?
As app usage grows and the fundamental value of apps increases for users, users develop app habits which then lead to revenue growth through all channels: app stores, advertising and commerce. This is what’s very clearly happening in the United States, Japan and other established markets. Users are spending more time in the apps they love, which leads to more revenue from in-app advertising and more in-app payments and service fees.
The exciting growth rates in app usage will translate into growing revenue numbers. Over the next five years, that trend will continue.
The Future of the App Economy
The future is bright for the universe of apps. We predict that worldwide gross consumer spend will surpass the $100 billion mark by the end of 2018.
A few more predictions for the year future:
- Increased app store curation will lead to a boom in an-app purchase (IAP) revenue.
- Improvements in discoverability will lead to increased revenues for indie devs.
Those are just the highlights, but there is much more to the mobile app revenue story.
In the next lesson, we'll zoom out to look at the worldwide app economy including key highlights of differences by global region.