The Future of the App Economy

According to App Annie, a formidable mobile app data and insights platform, the global mobile app market is projected to balloon by 24 percent to reach $51 billion in gross revenue across the board (all app stores) this year. By the end of the decade, this gross revenue they speak of will go past the $100 billion mark around the globe. The mobile app market’s continued expansion will be seen as a result of steady growth in many mature markets together with accelerated growth in emerging markets. Pillars in this growth spurt are countries like the United States, Japan, and China, while emerging forces to be reckoned with are India, Indonesia, Mexico, and Argentina.

In due time, China will surge past the US in terms of total revenue from app stores by mid 2016, what with it already having usurped the US in terms of downloads last year. What has proven to be remarkable is the recession-resilience of app revenues so far, with encouraging signs of growth in countries like Argentina and Brazil.

People should not be too surprised to learn that the app economy has become even bigger than Hollywood, as it should. Industries like sports and entertainment merely trail in its wake, simply because technology has shifted the paradigm of how establishments do business and how humans behave. Of late, it has been a pleasure being an app developer, with app studios flourishing by way of the numerous apps that have been built for the masses, which span from games, to media outlets, and large enterprises.

While riding the current wave, it is pertinent to anticipate the key factors that will affect the industry in the next half of the decade.

Globalisation

Growth of app studios in countries like Singapore is linked with the deluge of smartphone adoption in the region. Indonesia for example, has a local mobile market that is up and coming, with no plans to slow down until the second half of its population gets on the smartphone bandwagon, this in contrast with US’s population peaking at 75% in terms of smartphone usage. Indonesia’s asian counterparts like Japan, Korea, China, and Singapore are relative leaders with their ‘mobile-first’ mentality, where ‘mobile’ means a lot more than just making phone calls.

Cross-device development

We all can’t wait for connectivity in our world to get to the next level, what with developers and innovators are pondering on how best to take advantage of the emerging era of connected cars, and intelligent appliances that function as hubs for entire households. This phenomenon is known as the Internet of Things, with common knowledge abound these days that half of the developer population is currently working on at least IoT project. Leading in terms of popularity amongst developers is the Smart Home, followed by Wearables, and then Retail, which is surprising, considering eCommerce rakes in the money for developers.

Supply and Demand

In the year 2014, Google Play witnessed a growth of double in volume of apps, with the Apple App store seeing significantly lower growth, but both seeing figures cross a million. With globalisation in the furore, it is likely that this will continue, with the economy split up into 23% demand from enterprises, 30% from small businesses, and 37% from startups (ContractIQ), and the never-ending increase in smartphone adoption around the world.

New Frontiers

“The open nature of the app stores and the size of the addressable market made it seem as if anyone who could create a decent app could make their fortune, or at least a decent living writing their own apps. As the market has matured it has become painfully difficult for a small developer to be noticed. Also, the quality and functionality bars have gone up to the point where it’s hard for a solo developer or a very small team to compete in the consumer app market.” – Developer Economics Survey.

Having said that, what needs to be watched out for in the time to come, will be the shift from user acquisition/install quantity to user engagement/install quality, as it should. This should be spelt out clearly with tactics that once used to lobby for low-quality user installs, such as incentivised installs, now evolving to more organic and engaged users who plan to stick around in the long run. Marching with this tune, ad campaigns should see themselves getting tweaked to produce more engagement, and the resultant analytics to make better measurements in terms of long term ROI.

Oh, the future looks bright indeed.

Photo: www.bandt.com.au

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