The vast majority of money spent on mobile app stores went to games, according to a report, as did the majority of time spent on phones, and the majority of advertising revenue.
In 2019, more than $86bn (£66bn) was spent on mobile gaming, making the sector larger than the rest of the games industry combined. That revenue represented 72% of all App Store spend, according to data from the analytics firm AppAnnie, in its State of Mobile 2020 report.
“If you’re sitting there thinking, ‘I’ve just learned to write code, what should I do?’,” said Paul Barnes, AppAnnie’s managing director for EMEA, “you should make a game.”
”Outside of games, there’s another story of dominance, with the old system of paying upfront to download apps all but dead. On iOS, in-app subscriptions contribute 97% to non-gaming spend within apps (one-off in app purchases, typically either “unlocks” for full versions or content downloads, made up the other 3%), while non-gaming subscriptions overall grew to represent 28% of the spend on app stores.
That growth is driven in large part by a few hugely successful subscription based apps, including Netflix, China’s Tencent Video and Tinder, which was the highest grossing mobile app in the world last year and the second highest grossing across the last decade. Of the top 250 apps by spend, 94% are monetised through in-app subscriptions.
Not every aspect of the mobile economy is covered by the report, however. Spend through e-commerce apps, which is not charged through in-app purchases, cannot be counted; nor can subscriptions, such as those for most major news apps and Spotify, which are bought through web browsers rather than the subscription tools provided by Apple and Google.
Developers have good reasons to seek alternative ways of taking revenue. Both Apple and Google charge substantial fees for in-app payments, peaking at 30% for the iOS App Store. For that reason, Barnes predicts one of the biggest conflicts of 2020 will be around who gets to dodge those fees.
“Avoiding App Store fees, like we’ve seen Amazon and Fortnite do over the last few years, is going to play out in 2020,” Barnes said. Amazon has always required Kindle users to buy ebooks on its website, avoiding Apple’s cut, while Epic Games dropped Fortnite from the Google Play Store in 2019 in favour of launching its own Android App Store, where it could reap 100% of the revenue. “Already, though, the revenue through those sources reflects extra hidden growth in the mobile ecosystem.”
The report highlights a number of other areas of opportunity over the next year, including:
- Ride-sharing apps, where the UK has the most concentrated market among those analysed, with Uber taking the vast majority of business. The possibility of the company losing its license to operate in London, however, combined with the recent entry of incumbents such as Kapten and Bolt, could change that, Barnes suggested.
- Monzo, which had the highest year-over-year growth in downloads of any finance app in the UK. In most countries, the “breakout” finance apps provided single-service feature sets, from payments to security, but Monzo, as a fully featured bank, points to Britain’s mature fintech ecosystem. Two other banks, Starling and Revolut, were also in the top five UK fintech apps by growth.
- TikTok’s growth shows no sign of stopping, with global time spent in the app growing three-fold over the course of 2019. But it was a little-known anonymous Q&A app called Yolo that had the highest growth in both the UK and US over the past year, pushing TikTok into second place.
Across all the markets analysed, people spend three hours 40 minutes on their phones each day, a 35% increase on 2016, while the average “Zoomer” – a member of Generation Z, born between 1997 and 2012 – spends nearly four hours a month on each of their top 25 non-gaming apps, and more again in mobile games.