The app ecosystem’s nonstop growth finally slipped this past year. An annual review of the app economy by mobile analytics firm data.ai (previously App Annie) found that consumer spending on mobile apps declined for the first time in 2022 after seeing 19% year-over-year growth the year prior. Consumer spending dropped by 2% in 2022, the report said, reaching $167 billion. Meanwhile, downloads grew by 11% year-over-year to 255 billion, while hours spent in Android apps alone grew 9% to reach 4.1 trillion.
The new analysis, found in the firm’s annual “State of Mobile” report is based on consumer spending across all app stores, including third-party Android app stores in China. It shows the impact of a down economy on what, until now, has largely been a growth industry where every year saw apps raking in more money than the year before.
“For the first time, macroeconomic factors are dampening growth in mobile spend,” noted data.ai CEO Theodore Krantz, in a statement about the firm’s new findings. “Consumer spend is tightening while demand for mobile is the gold standard,” he added.
In years past, mobile games drove much of consumer spending on apps, but as subscriptions became a more popular way to generate revenue from non-game apps, that gap has narrowed.
As it turned out, non-game apps have proven to be more resilient in a down economy, data.ai found, possibly because consumers view apps as more essential than games. In 2022, spending on games dropped 5% to $110 billion, while spending on non-game apps increased 6% to $58 billion — the latter, driven by streaming subscriptions, dating apps and short-form video apps.
Another angle that demonstrates the disproportionate impact the economy had on games is by looking at how many games in 2022 surpassed either $10 million, $100 million or $1 billion in revenues. This year, the number of games in each of those categories fell by 1%, 4% and 33%, respectively.
In total, 1,419 apps and games topped $10 million annually in 2022, 224 topped $100 million and just 10 topped $1 billion.
Ahead of data.ai’s report, Apple on Tuesday released its own 2022 App Store metrics which touted a record $320 billion in money paid to developers since the App Store’s founding. While some back-of-the-napkin math suggested consumer spending may have slowed on its platform, it’s not possible to come up with exact figures because app developers, as a group, no longer pay Apple a 30% commission on in-app purchases. Some indie developers may have qualified for an Apple small business discount. Plus, Apple offers different commission structures for apps providing access to media and those run by some news publishers (as does Google).
Though data.ai’s report shows that consumer spending clearly took a hit in 2022, other areas of the app economy saw growth, including daily time spent per user, which grew a modest 3% year-over-year to reach five hours per day in top mobile markets — or as much as one-third of daily waking hours, the firm notes.
Among the top 10 markets analyzed, several topped five hours per day, including Indonesia, Brazil, Saudi Arabia, Singapore and South Korea. Meanwhile, time spent grew the fastest over four years in Saudi Arabia, Australia and Singapore at 68%, 67% and 62%, respectively.
Consumers tended to spend most of their time in three app categories, which accounted for half the time spent on mobile: Social Media/Communication (19.5% of total time); Entertainment/Short Video (17% of total time); and Entertainment/Video Sharing (12.7% of total time).
The first category — Social Media/Communication — includes WeChat, WhatsApp, Facebook, Messenger, Telegram, LINE and Discord, while the Entertainment and Short Video category is where you’ll find TikTok as well as Kwai, Vido Video, Baidu Haokan and Snack Video. The last category of Entertainment and Video Sharing includes long-form video like YouTube, YouTube Kids and bilibili.
Mobile ad spending also grew 14% year-over-year to reach $336 billion in 2022, though data.ai warns this growth will slow in the face of economic headwinds. Short-form video apps, like TikTok and YouTube, are expected to drive much of this ad spend as social networking platforms decline.
Downloads climbed in 2022 as well, including an 8% year-over-year rise in game installs to reach 90 billion, and non-game downloads reaching 165 billion, up 13%. Popular genres driving this trend included Simulation Driving, Hypercasual Simulation and Simulation Sports in games. App downloads were driven by personal loan apps (up 81%), Buy Now, Pay Later apps (up 47%), Coupons & Rewards apps (up 27%) and Budget & Expense trackers (up 19%).
However, both the crypto trading and investing app categories saw their app downloads drop by 55% year-over-year.
The full report takes a deeper dive into other mobile trends in 2022, including those impacting sectors like finance, retail, social, video, food & drink, travel, health & fitness/sports and more. Gen Z trends are highlighted as well, such as their commitment to video, user-generated content, mindfulness apps and their interest in friend-finding apps like Yubo, Hoop and Bumble (which has a friend-finding feature).
Data.ai also revealed the year’s top apps across downloads, consumer spend and monthly active users.
Last year, TikTok was the top app by downloads and spending, but Facebook was top by monthly active users.
2022 delivers a bit of a twist as Instagram edged out TikTok for the No. 1 spot by downloads, though the other two categories’ No. 1’s remained the same. And while much has been said about Meta’s decline this year, its apps are still holding their own by active users — Facebook, WhatsApp, Instagram and Messenger hold the top four spots on the list by monthly actives.
Video and dating apps continue to pull in the most revenue, with Tinder and Disney+ still highly ranked, behind TikTok — which was also the top social app by consumer spending. The report noted that TikTok also this year bacame the second non-game app to top $6 billion in all-time consumer spending — only Tinder has seen higher revenues. This year, TikTok reached the top spot with more than $3 billion in consumer spending.