Summits Yellow

Plenty of Growth Left in Apps, says Ovum

David Murphy

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The mobile app market will grow more over the next five years than since its inception eight years ago, according to the analyst, Ovum.

More than three times as much revenue will be generated between 2016 and 2020 than was generated between 2008 and 2015, and there will be 2.5 times as many downloads. Between 2008 and 2013, there were 638bn cumulative downloads and revenues of $99bn. The corresponding figures for the period 2016 – 2020 are 1.621bn downloads and $324bn in revenues.

“Downloads will however see a marked slowdown in mature smartphone markets as they approach saturation and as user acquisition costs escalate, placing a greater emphasis on download quality rather than quantity,” says Guillermo Escofet, principal analyst in Ovum’s Digital Media team and author of the report, entitled App Revenue to Double by 2020, Outpacing Download Growth. “Revenue, on the other hand, will continue on a higher growth trajectory as people spend more time on apps and as in-app spending intensifies.”

Growth in global average revenue per download will tail off by the end of the forecast period, as late adopters and emerging markets become ever greater contributors to the global pie. Emerging markets will register the steepest growth rate over the next five years in both downloads and revenue – twice as steep as developed markets in the case of the latter. Yet developed markets will continue to capture the largest share of revenue. Downloads, on the other hand, will continue to be dominated by emerging markets. Also, emerging markets’ share of both downloads and revenue will increase.

Ovum’s research sees China as the reason for emerging markets’ dominance in downloads. The world’s most populous country – and biggest smartphone market – accounts for the largest share by far of app installs throughout the forecast period from 2013 to 2020. It currently accounts for over half of installs. According to Escofet, the bulk of this is driven by its huge Android independent app store sector. He concludes, “China will also end up as the top-grossing country, helped by its huge mobile gaming industry.”