Don’t Go To Sleep On App Revenue
App Annie is out with its quarterly update of worldwide app downloads for Q1’18. The headline is that total download revenue surged +22% YoY to $18.4B in Q1, and is forecasted to top $80B for the full year. This total only reflects original app downloads (so no re-installs or app updates), and just counts revenue directly tied to app downloads, app subscriptions, or in-app purchases.
To me the most fascinating thing about this report is the inverse nature of Apple’s and Andoid’s app business models. As you can see in the charts below Apple has a commanding lead over Google for app store revenue (left), but then Google is way outpacing Apple for total app downloads (right). So what should we make of these two very different stats? My interpretation is that Apple’s at the high point of its app monetization curve right now, with a massive footprint in more affluent markets. But as rosy as things look for iOS today, tomorrow belongs to Google’s Android. Just think of emerging markets like India, Brazil and the Philippine’s. In these countries Android smartphones are the handsets of choice (Android commands 86% of the global mobile devices at last count), which will continue to the drive Android’s app monetization curve up and to the right for years to come.
With all the focus on digital media sales, data monetization, search, etc., it’s sometimes easy to overlook app monetization. But apps are still the sleeping giant of digital with tens of billions in annual sales and a torrid growth pace.