Perhaps to counter concerns over iPhone sales and China, Apple this week released numbers related to the App Store’s growth that demonstrate the very real impact China is having on its app ecosystem and developer community.
The company said that, in July, it had its largest number of transacting customers with over $1.7 billion in billings. In addition, the same month broke records for China, too, which also saw the largest number of transacting customers, Apple said.
To date, the company has paid out $33 billion to App Store developers, it said – $8 billion of which was in 2015 alone. For comparison’s sake, just over a year ago, Apple said it had paid $20 billion to developers.
And despite signs that it’s becoming increasingly difficult to gain visibility in an App Store which today features over 1.5 million mobile applications and games available for download, the growth in new app releases shows no signs of slowing down.
China’s outsized role on the mobile app ecosystem has been on display for some time, of course.
In April, for example, China overtook the U.S. to become the number one source of iOS downloads, according to a report from App Annie. At the time, App Annie noted that China’s App Store downloads had exploded in Q1 2015, growing at a rate of 30 percent year-over-year. The trend was due to a growing install base of iPhone users in the country, a number of whom chose the iPhone thanks to the now-larger screen sizes of the iPhone 6 and 6 Plus.
A preference for a larger screen size came about due to China’s mobile-first nature – in the country, smartphone adoption exceeds PC adoption, meaning that many users carry out their tasks on phones instead of computers.
Apple also played into China’s demand for iPhones by investing in its retail presence in the country. It expanded to 19 stores by April, up from just 8 in October 2013. And Apple has said it’s on track for 40 stores in Greater China by mid-2016.
Meanwhile, by the second quarter of 2015, the earlier download growth in China began to heavily impact iOS revenue, too. During this time, China saw the biggest quarterly sequential gain in revenue share. This, in turn, helped the iOS App Store maintain its revenue lead over Google Play, despite the fact that Google Play downloads in the quarter were approximately 85 percent higher than on the iOS App Store – up from the 70 percent gap seen in Q1.
In other words, Apple’s recent reveal that China had a good July in terms of transacting customers should come as no surprise to industry watchers.
“Apple’s strong monetization growth in July is consistent with the overall trend of iOS as the leading platform for monetization in most markets,” explains Fabien-Pierre Nicolas, VP of Marketing, Communications and Community at App Annie. “China, already the No. 1 iOS market in downloads since March, is leading the charge on the growth side.”
Curious about what sort of apps are contributing heavily to China’s iOS App Store revenue gains?
More recently, it’s been those in the video streaming space, App Annie said in its Q2 report. Those apps, including names like Youku, iQIYI and Tencent Video, saw “explosive” revenue growth in the quarter while also dominating the user rankings of iOS Entertainment apps in China. The apps themselves offer a range of content, from YouTube-like user submissions to movies and popular TV shows, including those from overseas, as well as original programming.
To illustrate the reach and scope of these apps, App Annie noted that iQIYI recently announced 5 million paying subscribers – up 765 percent from last year. Youku said its daily video views passed 900 million, while its consumer revenues from subscriptions and pay-per-view were up 649 percent. (Cord-cutting, after all, is a trend impacting consumers worldwide, not just the U.S.!)
Of course, games remain a popular category in China, too – the largest by downloads and revenue. On that front, a Strategy Analytics report last month noted that 81 percent of the top 100 grossing iPhone apps in China were games. That’s also having a sizable impact on China’s growing App Store revenue.
China is still tops today in terms of downloads, having maintained its top spot in Q2. Now, it’s steadily climbing up the revenue rankings as well. The country ended Q2 in spot No. 3 – just behind the U.S. and Japan.