App revenue to reach $85bn by 2020, 450% jump in Apple Pay transactions and more: mobile buzz of the week

The lines between digital, mobile, technology and apps are blurring in today’s world. We at Robosoft are keen followers of developments in this arena. Here’s a quick summary of what’s buzzing:

App revenue to reach $85b by 2020, non-game apps will record most growth

According to a report published by the mobile intelligence firm Newzoo, App revenue in 2017 will be $54.4bn and will reach $85bn by 2020 with a CAGR of 18%. The report also states that, though gaming apps will continue to see a spike in growth, non-gaming apps will catch up soon and will record a higher growth rate (29.5%).

The growth in the app revenue is an outcome of increasing number of smartphone users, which is expected to reach 3.6 billion by 2020. It is interesting to note that while this number will grow steadily for U.S. and Europe most of this growth will come from Africa, the Middle East and Asia Pacific.

In the coming years advancements such has VR (Virtual Reality), mobile payments, growing demand of OTT apps, emergence of alternative app distribution methods etc. will have a significant impact on the mobile market. Looking at these statistics it is clear that businesses can no longer look at mobile strategies at an ad-hoc basis and will have to integrate mobile thinking into their business strategies.

Image Source: Newzoo

Apple Pay transaction volumes sees a phenomenal growth of 450%

During Apple’s investor conference call, CEO Tim Cook announced a growth of 450% YoY on Apple Pay transaction volumes. In the UK alone the acceptance points for Apple Pay grew by 44% last year, while monthly transactions grew by nearly 300%. Even in markets like Japan, where Apple Pay was launched in October last year, it has seen 20 Million transactions per month.

Currently, Apple Pay services are available in 15 countries including U.S., U.K., Canada, Hongkong etc. with Taiwan and Ireland being the latest additions to the list and it is accepted at 20 million locations worldwide. One of the major reason for the phenomenal growth in Apple Pay’s transaction nos. can be owed to the rise in the number of subscribers in the Apple ecosystem, which increased by 50 million unique subscriptions in the first quarter alone.

(Google’s) Android pay and Samsung Pay are the major competitors of Apple Pay right now. However, Apple is also planning also introduce a peer to peer payment (P2P) service as an extension of Apple Pay. With this Apple Pay is going to enter the P2P payments market with the likes of (Pay Pal’s) Venmo, Google wallet, Snap cash etc.

According to a report, the overall Mobile payment market is at a sweet spot right now and is going to be so for the coming few years. It is expected that this market will reach $3,888 billion by 2022. This growth will come as a result of increased penetration of smartphones, growth in the m-commerce industry and customer’s need for easy transactions.

Gaming apps earn most revenue out of in-app purchases, not advertising

According to a study done by Apptopia, a considerable amount of game studios earn their revenue through in-app purchases as opposed to advertising. These findings were based on a study done by Apptopia on the revenue structure of the top 5 names in mobile gaming (Supercell, ATVI, GLUU, ZYNGA, EA) over the previous quarter.

While, the number of users spending money on in-app purchases is just over 5%, these users account for 20 times more revenue compared to all other users combined.

In-app purchases give users the flexibility to try out apps and then choose to buy certain upgrades and features that appeal to them. Though, a large number of users are ready to choose free apps with ads, they consider in-app advertising to be interruptive. Therefore, most publishers offer a free version of their app first, which also allows them to reach a larger audience and then engage with users with added features available through in-app purchases.

Given the fact that in-app purchase is not a guaranteed revenue generating model and is highly dependent on the value the user sees in the added features, publishers are now trying to adopt in-app advertising which is less interruptive for users with formats like native advertising.

Apple updates its App analytics service with insights on how apps get discovered

Apple recently updated its App Analytics service for iTunes Connect, to provide insights on how users found an app. Now, mobile developers on iTunes connect will be able to figure out whether a user found an app through App Store search, referrals by another app/website, web search or by any other method.

The updated version of App Analytics will have the following new metrics: App Store Browse, App Store Search, App Referrer and Web Referrer

App Store Browse and App Store Search: While Browse will let the developers know if the app was found through the featured categories or Top Charts in the App Store, Search source will give details about the customers who found an app by entering a search query.

Apart from the insights on how many users discovered an app while searching or browsing the App Store the newly added metric would also measure the number of clicks on search ads enabling app marketers and developers to understand how marketing campaigns and metadata impact downloads.

App Referrer and Web Referrer: App Referrer would give insights on the number of downloads an app publisher is giving, helping marketers focus on publishers that drive the most App Store impressions & downloads and Web Referrer would throw light on the downloads that happened via web browsers like iOS or Safari.

Though there are third party app analytics tools like AppsFlyer, AppAnnie, Appse etc. available in the market, having these insights first hand from Apple Store is a more reliable way for developers to gain insights on their app performance.

To get deeper insights on app search and discoverability you might also want to read our blog on “How users search apps and what leads them to download”.