Report Says Subscriptions Will Boost App Store Revenue Growth
It’s no surprise that Apple continues to dominate the app scene. Android, Samsung and Microsoft have made strides but as the first smartphone maker out of the gate, Apple is maximizing its app potential, according to a new report from Strategy Analytics.
The market research firm’s iOS apps forecast published today predicted the App Store’s revenue will hit nearly $30 billion by 2021. That translates to an app developer payout of more than $140 billion between 2008 when the store launched and 2021.
As the App Store revenues keep growing, the companies that benefit from the growth are constantly changing, according to the report. In fact, those companies “change significantly,” Strategy Analytics noted. For example, early app developers who debuted software in the App Store in 2008 saw millions in revenues roll in but today the momentum has shifted to virtual goods and in-app purchases. A full 80 percent of revenue is driven by game companies, according to the report.
Numbers Too Aggressive?
Strategy Analytics said the revenue will shift again. The firm said it expected global content owners, such as Disney, YouTube, Netflix, Hulu and Spotify, to see exponential revenue growth thanks, in part, to in-app subscription sign ups. Emerging markets will drive much of that growth since iOS users in those nations will tap into these services for the first time through Apple devices.
“The ascent of Netflix to the top of the highest grossing entertainment apps within just days of enabling in-app sign-up is a testament to the power of apps and iOS,” said Joshua Martin, chief apps evangelist at Strategy Analytics, in a statement. “Simply by enabling a feature Netflix found a new universe of users. The stickiness of subscription services such as Netflix and its contemporaries will see content owners sit atop the highest grossing entertainment apps and longer term amongst the highest grossing apps overall globally.”
With Apple continuing to post growth and its long-standing position at the premium end of the market, along with embedded technology easing in-app payment, the market research firm said that the iOS platform should see more sign-ups for subscription services in the years ahead. Do other analysts agree?
“While such aggressive forecasts are often incorrect on their target dates, directionally I have no problem believing that billions more will be earned and paid out to iOS developers,” Greg Sterling, vice president of strategy and insight at the Local Search Association, told us. “Given that apps dominate mobile time spent they continue to be a growth opportunity for developers and publishers.”
Beyond iPods, iPads and iPhones, the Apple Watch and the all-new Apple TV could also help the apps revenue cause. Strategy Analytics is sure these new devices will extend app capabilities and augment the value of subscriptions beyond entertainment.
With more than 300 billion apps downloaded between 2008 and 2021, the App Store is an important marketplace for companies that want to attract new customers, upsell and cross sell loyalists, and break into new geographic territories.
“Other revenue streams remain strong -- in-app purchase will still drive billions in revenue each year throughout our forecast, but the growth of subscription and consolidation among key players is a key trend that will drive future growth for the App Store, Apple, and content owners," said Martin.