Report: Market For Paid Apps Hits $8B In 2012, While Average Revenue Per App Drops 27%

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The mobile app economy continued to show impressive growth in 2012, with Apple’s App Store maintaining its course, while its rival, Google Play, was able to make some significant gains. A November report from mobile analytics firm App Annie showed that, while iOS revenues still hold a lead over its rival, Google Play revenues were up 311 percent overall from January 2012 and downloads were up 48 percent. And today, Darrell touched on a new year-end report from mobile analytics firm adeven, which expects the iOS App Store to add over 435,000 new apps to its roster in 2013, up from around 380K in 2012.

With the onslaught of apps likely to continue, this only serves to highlight two of the biggest problems facing the app economy in 2012 (and going forward): Discovery and revenue. Both go hand in hand, as undercooked discovery mechanisms have played a hand in what has become an imbalance of wealth, with app store riches being dominated by top developers. A recent report from Canalys found, for example, that just 25 developers accounted for half of app revenue in the App Store and Google Play.

Today, Research firm research2guidance published its own year-end report, offering key findings that found that, while the app economy continues to grow at an impressive speed, we may be closing in on a period of plateau-ing growth for mobile apps.

The report found that the number of new apps in the world’s major app stores has now exceeded the demand for these apps, which has led to diminishing returns in revenue and is now beginning to reflect the role of paid content on the Web — that is, that it’s become an increasingly less profitable business model over the years.

Research2Guidance’s Markus Pohl tells us that the market for paid application downloads reached $8 billion in 2012 in the top five app platforms, representing an increase of 27 percent compared to 2011. In the meantime, however, average revenue for paid apps decreased by 27 percent from $26,720 in 2011 to $19,560 in 2012.

These projections (which include the fourth quarter of 2012) are derived from Research2Guidance’s data from the last complete quarter, i.e. Q3 2012, in which the report finds that 179.7 million smartphones were shipped — 16.7 percent more than in the previous quarter.

In addition, smartphones’ share of total mobile device sales increased to 40.4 percent from 36.7 percent, in which Samsung managed to exceed 31 percent of the total market share — the first time it has owned nearly one-third of the market. At the same time, Nokia dropped out of the top 5 smartphone vendors.

Meanwhile the total number of smartphone and tablet applications published reaching nearly three million in Q3 2012, while the iOS App Store had 951,890 apps at the end of Q3, while Google Play had 453,719. The average paid app selling price stood at $2.82, with revenue accrued from paid app downloads hitting $3.4 billion in Q3, and downloads totaling 12.4 billion.

Another notable development for the quarter, indicating a trend over the course of the year? During Q3, Android was again the only OS to significantly gain marketshare, rising 5.3 percent, while Apple’s marketshare dropped 2.3 percent.

Readers can find Research2Guidance’s full report here, Distimo’s year-end app store report here, or Darrell’s coverage of adeven’s report here.

In 2012 smartphone users 8 billion US$ for paid apps in the top 5 app stores