Mobile App Market Trends and Prospects: Talking About Money

Original author: Stacy Golmack
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The mobile application market is growing by leaps and bounds. This huge industry is expanding every day and is not going to stop. The army of developers of mobile applications has grown rapidly, the number of applications themselves is breaking records. The revenue generated by the mobile app industry has reached sky-high figures.

Hybrid monetization models (for example, in-app ads and in-app purchases) are quickly gaining popularity in the business world. Most studies suggest that embedded advertising will be a major factor in the growth of the mobile market in the coming years .

We at Alconost have translated an article that sheds light on the following questions:

  • What is the average mobile app’s revenue?
  • Is average income really growing?
  • What are the biggest challenges facing the mobile app industry today?
  • What monetization models are most popular on the market today? What will be the growth factors tomorrow? What models have already outlived their own?

All of the conclusions below are based on statistical reports and expert opinion.

The mobile app market still has a large margin of growth


According to App Annie , the mobile application industry has created a whopping $ 41.1 billion in gross annual income, and is expected to grow to $ 50.9 billion. Statista forecasts that in 2020, gross annual income will exceed $ 189 billion. Despite the fact that the data is different Researchers are slightly different, the general conclusion is that the market is far from saturated. App Annie forecasts were confirmed in Forrester reports that by the end of 2016, only 46% of the world's population owned smartphones. This suggests that the widely discussed mobile revolution is just beginning.

Other Forrester statisticsdemonstrates a huge gap between leading companies for which mobile devices have become a catalyst for the transformation of their business, and companies that treat mobile devices simply as another development direction. At the beginning of 2016, only 18% of the companies surveyed were in the first category. This figure is expected to overcome 25% as early as next year.

Consumers are evolving even faster than business. Today, mobile Internet has become an urgent need for many users.

In terms of popularity, aggregator applications are likely to come to the fore.. These are tools that allow you to get content from various online resources and combine it in a simple, clear interface. Content can be very diverse: from hot news to niche interests. Aggregators are designed for those who do not have time or desire to visit many sites or install many applications. Popular aggregator applications include Flipboard, News360, Feedly, and IFTTT.

Aggregator applications tend to gain popularity among users when they are convenient or improve the shopping process. For example, Facebook did this with the Messenger app, which allows users to read their feeds and call Uber.

Rich and poor platforms


Two giants of mobile development Android and iOS dominate the global smartphone market. According to a Gartner study , 87.8% of smartphones sold in the third quarter of 2016 are Android. This figure is 3.1% higher than a year ago. The iOS market share is 11.5% (2% lower than in 2015). And although this indicator is negligible for a huge market share already covered, this growth greatly weakens the positions of other market players. Windows, on whose account 0.4% of all smartphones sold, finished third in the mobile platform race with a decrease in its share by 2.5% for the year.

Apple and Google have the largest and most popular app stores. Today it seems that the other market participants have nothing to dream of comparing with them in terms of the range of applications and the number of developers.

InMobi estimates that 55% of developers earn less than $ 1,000. Moreover, a third of application developers around the world were unable to get 10,000 downloads of their products. Income inequality is more pronounced for Android developers, while among iOS developers, the distribution of income is more balanced.

Since 2016, more than 25% of iOS developers have generated over $ 5,000 in monthly revenue. Among Android developers, such indicators reached only 16%.

And here is an interesting statistic of the average monthly income that mobile operating systems brought. Forbes estimates that iOS earned an average of $ 4,000 per month; in second place was Android with its $ 1,125; the third is an outsider of Windows Phone and only $ 625.

However, this situation changed dramatically in 2016. According to Statista , the Windows Phone app generates an average of $ 11,400 per month, while the iOS app generates $ 8,100 and Android generates $ 4,900. At the same time, 75% of developers are Android followers. They have plans to increase their income by making products for Android.

Range of Mobile Applications


High-performance mobile processors, support for powerful graphics, high-quality screens and a fast Internet connection have turned smartphones into gaming devices. According to App Annie reports , mobile games, which accounted for less than 50% of all mobile app revenue in 2011, generated 85% of the mobile app market revenue in 2015. This is $ 34.8 billion for the whole world.

The growing share of mobile games in the mobile application industry is impressive.

The time spent by users in various types of applications has increased dramatically. At the same time, non-gaming applications bypassed the game. According to Flurry Analytics , by the end of 2015, the mobile application market set a new record for application use:

  • Applications for personalizing devices (shells, icons, background images for the main screen and lock screen, etc.) topped the list with a staggering 332% increase in usage per session.
  • Mobile versions of newspapers and magazines took second place with a huge increase of 135%.
  • Productivity tools ranked third: 125% growth.
  • Shopping and lifestyle solutions showed 81% growth and fourth place.
  • Applications for travel, sports, health and fitness - along with instant messengers and social applications - grew by 53–54%.
  • Games turned out to be the only outsider: in them, users spent 1% less time.

Monetization Models


Today, there are six popular application monetization models.

Direct sales


If the paid application has not yet been purchased, only screenshots, a description and a video are available for viewing . They are needed in order to convince people to buy the application and show that they will get exactly what they see. But with such an approach, it is difficult for users to make a decision, which probably affected disappointing statistics: paid applications are not included in the number of those who generate the largest income. It is paid applications that lose the battle for popularity, although in some cases they still justify themselves.

Minecraft Pocket Edition is the most profitable app on the Google Play store. Minecraft was released in 2011 as a sandbox video game, and costs $ 6.99 per download.
Minecraft pocket edition

Freemium: shareware


When using Freemium (a combination of “free”, that is, “free” and “premium”), the main features are available to users for free, and the advanced functionality is available for a one-time fee or for a paid subscription. Usually the number of those who are willing to pay is relatively small. Therefore, applications using this model are focused on ensuring the maximum number of downloads.

Despite serious criticism of its potentially speculative mechanisms, the Freemium model works great when thoughtfully applied. The best example is Clash of Clans .

Clash of clans

Subscription


The subscription is similar to Freemium. The difference is that users pay for access to the full content, and not to individual features. This model generates a predictable long-term income for the owner, while maintaining high user loyalty.

A great example of a subscription-based app is Lumosity , which has over 50 different exercises designed by cognitive psychologists to train the brain. Lumosity offers a monthly subscription ($ 11.99 per month) and a year ($ 59.99 per year). The average app rating based on a rating of 93,000 users is five stars, and this is a phenomenal success among subscription apps.


Lumosity App

In-App Purchases


Monetization through in-app purchases is very typical for mobile games, as well as for various applications with product catalogs that charge a fee for selling each item. This model is so flexible that some games go too far with calls to shop. According to Tech Times for February 2016, about 1.9% of users of mobile games made purchases from applications, and the number of such players is growing steadily.

An example is MeetMe , a social app in which users can also buy certain products and services. At MeetMe, you can pay a certain amount to increase the number of views on your profile. Developers get a decent income thanks to an understandable sales system.


Meetme

Crowdfunding


Crowdfunding is a relatively new monetization model. The developers present the idea of ​​the application they want to create on a popular online platform like Kickstarter or Indiegogo and ask to support the idea with contributions. It happens that interesting projects receive financing several times more than originally requested, while ordinary projects do not gain the necessary amounts. Shadow

tech startup is a perfect example. The project achieved impressive success with crowdfunding: the developers received $ 82,577 from 3,784 people who supported the project. Shadow went on a crowdfunding sleep tracking app, adding exclusivity to rewards and design.

For owners of the exclusive Shadow card, the application was free, but even when its price went up to $ 8, this alone managed to earn about $ 20,000.


Shadow

Sponsorship


Sponsorship is a fairly new monetization model. Users act as advertising sponsors in exchange for a fee. Part of each payout goes to the developers. The model is still raw, its marketing strategy needs to be further developed.

RunKeeper , with a community of over 45 million users, is a good example of a sponsorship business model. The application encourages users to overcome a certain distance by running or cycling. Advertisers then pay users. The model is based on trust in developers who do not place any annoying ads.


Runkeeper

Monetization through advertising


This is the most popular monetization model and needs to be considered in more detail. The reason for its popularity is obvious: users like to download free applications, and the more the number of downloads, the more developers’s income. The IHS Markit report suggests that by 2020, in-line advertising will generate $ 53.4 billion in total revenue per year. This is almost 63% of mobile display ad revenue.

As in other sectors, several major advertising application developers generate the bulk of revenue. All other developers are forced to be content with leftovers. According to Klick Health, Facebook is the undisputed leader with its 44.3% of all mobile ad impressions through its apps. Further in the ranking in order: Alibaba, Google, Tencent, Twitter, Pandora and Yahoo.

Companies that generate the highest advertising revenue often become major advertising sponsors. This trend is especially noticeable among mobile games. Major developers, such as Rovio, Gameloft, and Disney, are recruiting hundreds of small indie studios that advertise their gaming products in less popular games.

Summary


As you can see, the explosive growth of the mobile application market will continue in the near future. Despite the increasing competition in the industry, developers are using new methods of monetization and are creating more and more interesting and useful solutions for users. At least two new monetization models have worked well and are gaining popularity in recent days.

None of the models we examined can be called ineffective. On the contrary: developers and publishers have learned to apply these models according to the situation. For example, a subscription model only works in certain niches, but is the most profitable of all. At the same time, the Freemium model, which is so criticized for potential dishonesty, when thoughtfully applied, gives amazing results, for example the Clash of Clans. And only paid applications fall into disgrace, although they still pay off in some cases.

Hybrid monetization models, such as in-app advertising and in-app purchases, are clearly gaining popularity in the business world. Most studies suggest that embedded advertising will be a major factor in the growth of the mobile market in the coming years.

Today, iOS and Android are leading mobile operating systems, while tech giants Apple and Google own the largest mobile app stores.

How the mobile games market will develop, time will tell. Market trends suggest that in the foreseeable future, the market will continue to generate more and more revenue. It’s clear that the widely discussed mobile app revolution is just beginning.


About the translator

The article was translated by Alconost.

Alconost localizes applications, games and sites in 62 languages. Native translators, linguistic testing, cloud platform with API, continuous localization, project managers 24/7, any format of string resources.

We also make advertising and educational videos - for sites that sell, image, advertising, educational, teasers, expliner, trailers for Google Play and the App Store.

Read more: alconost.com


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