App Annie: Android to top iOS in app store revenue this year

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Apple will lose its lead over Android in terms of revenue generated by mobile apps this year, according to a new report from App Annie, out today. However, the firm’s estimate is based on including third-party Android app stores in its forecast, not just Google Play. When the Apple App Store is pitted against Google Play alone, Apple is expected to maintain its lead through 2021, the report says.

App Annie is predicting worldwide mobile app downloads to surpass 352 billion in 2021, with gross consumer spend across all the app stores to surpass $139 billion.

The iOS App Store will account for a large chunk of that spend, as it’s expected to generate over $60 billion in 2021. Google Play will generate $42 billion, and third-party stores, $36 billion.

Those third-party stores – which include the Android app marketplaces offers by Tencent, Baidu, Xiaomi, Huawei, and others – accounted for $10 billion in revenue last year, and will grow to $20 billion in 2017, the report estimates.

 

The market for Android apps is growing thanks in large part to mobile adoption in China as well as other emerging markets, particularly Mexico, Brazil, and Indonesia.

This will impact app downloads, too. Android downloads from both Google Play and elsewhere will at an annualized rate of 23 percent to 299.9 billion by 2012.

App downloads are more evenly distributed across countries around the world, but revenue is another matter, App Annie also found.

According to its data, the top five countries by downloads – China, India, U.S., Brazil, and Indonesia – accounted for 54 percent of the downloads last year, and this won’t change much through 2021.

 

However, the top countries by revenue – China, U.S., Japan, South Korea, and U.K. – accounted for 75 percent of app store revenue in 2016. This is expected to grow to 85 percent by 2021.

The firm chalked up this shift to increased spending on games and subscriptions from existing smartphone users in mature markets like the U.S., Japan, and South Korea, but especially the maturing market that is China.

China, because of its vast population and growing middle class, still plays a key role when it comes to app store revenues, but its market is maturing, the report notes. The majority of Chinese app users are expected to settle into patterns of habitual use by 2021, which will allow revenue growth to be sustained even though downloads may slow.

Downloads in China will grow at an annualized rate of 19 percent from 2016 to 2021, while consumer spend will grow 24 percent to $56.5 billion. In larger cities, much of the smartphone market in China is already saturated, meaning a lot of growth will come from other regions across the country.

India, on the other hand, is still in the early stages of the app market maturity cycle, and will see significant download and revenue growth through 2021. Downloads will grow 28 percent to nearly 23 billion by 2021, and app store spend will grow an annualized rate of 75 percent to $2.1 billion.

Despite India’s growth, consumer spend will be lower in the region because of a variety of factors, including more limited purchasing power and a culture that focuses more on saving versus spending on games and entertainment, App Annie says. It suggests that app developers targeting India consider other revenue models, like advertising.