It’s been 8 years since the launch of App Store and 7 years since Apple’s pivotal “There’s an app for that” campaign, and today, how things have changed.
What was started as novelty items and time-wasting games have now grown into a critical part of our everyday lives and a booming billion-dollar business.
Today, mobile apps have been integrated into nearly every aspect of our lives. We use them to get where we’re going, to find a place to sleep, to order food right at doorsteps.
So, how far we have come exactly?
Let’s take a look…
Mobile app industry has grown as quickly and as dramatically as few other industries has. When Apple launched its App Store in 2008, mobile app industry revenues amounted to $1.8 billion.
Since then, the app industry has grown more than most could ever imagine.
And the best part is…
The Mobile App Industry Still Has Lot of Room Left to Grow
There are over 4 million mobile apps available for users, and the iPhone app owners alone generate $25 billion in revenue. According to App Annie reports, The entire mobile app industry generates $41.1 billion in revenue.
Today, the average mobile app user spends about 30 hours on mobile apps a month on more than 2 dozen mobile apps. Given that, 46% of app users also reported that they have paid for their apps. And by 2017, the 268 billion app downloads will generate revenue of $77 billion. In fact, these mobile apps are projected to generate $188.9 billion in 2020, according to Statistica.
Today, the consumers are evolving more rapidly than businesses. And, Internet has become a necessity for many users.
Mobile Apps Mean Big Businesses
The majority of app revenue is coming from paid downloads. However, it may not stay that way in future. Revenue generated from paid app downloads saw rapid growth in the past 5 years till 2016. It leaped from $7.1 billion to $27.6 billion, which is a 289% of increase.
But recently, this trend has leveled off and it’s forecast to stay that way. From the year 2015 to 2017, it shows only 7.4% increase in the forecast growth.
Does this mean the money is drying up?
It’s just moving models.
Generally, mobile apps make money from 3 monetization models.
Paid Apps: They make money by charging a fee per download or a monthly subscription fee.
Advertising: Here, the app makes money every time a user clicks or sees an ad.
In-App Purchases: Here, the app makes money from purchases that the user makes inside the app.
And the future (or at least for the time being) lies in the in-app purchase.
Worldwide in-app purchases totaled $24 billion in 2016 and this number is forecasted to increase to $37 billion next year. This amount is a whopping number of 50% increase.
When compared this with 2012’s numbers, in-app purchases have grown an astounding increase of 1,652% – from $2.1 billion to $36.8 billion.
In fact, for the first time, the revenue from in-app purchases will surpass the revenue from paid app downloads in 2017. While in 2016, the in-app purchases accounted for 40.8% of total app revenue and paid app downloads accounted for 47.5%. But in 2017, the paid app downloads will shrink to 37.8% of the mobile app market and the in-app purchases will grow to 48.2%. All of this data clearly indicates that in-app purchases are currently entering in their golden age.
The following chart will show the share of worldwide mobile app revenue from 2011 to 2017, by channel.
Apps in The On Demand Service Economy
One other possible future for mobile apps is that they expand itself into something more than apps. You might have probably noticed the service-based apps or the so called on demand apps – apps that act as an interface for a service-based business.
Uber, Instacart, TaskRabbit are all great examples.
While all of them are technically apps, but the actual value they provide is something outside the app environment.
For example, Uber gives a car to take you somewhere, Instacart delivers groceries as per your needs, TaskRabbit gives you a personal assistant for a couple of hours.
In fact, as the mobile app market continues to grow, we may see apps more as an entry point for brick-and-mortar operations.
Wherever But Only Up
No matter where the mobile app industry is headed, one thing is for sure: App business will keep booming.
The mobile app industry has grown steadily for almost a decade, and this growth will also seem to be continuing in 2020s. And regardless of how the future plays out, the app industry is more likely to become an integral part of our daily life as well as the global economy.