App revenue set to double, outpaces downloads

Global revenue for mobile apps is set to double, according to new forecasts from Ovum.

The analyst firm says over the next five years, app revenue will grow by 2.2 times to reach US$79bn in 2020, up from US$36bn in 2015.

According to the forecast, this is compared to a 1.8 times increase in the number of app downloads – from 211 billion in 2015 to 378 billion in 2020.

Ovum says the mobile app market will grow more over the next five years than since its inception eight years ago. 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, the firm explains.

"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 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," he explains.

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, the research finds.

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, Ovum says.

Downloads, on the other hand, will continue to be dominated by emerging markets, the research says. Emerging markets' share of both downloads and revenue will increase, according to Ovum.

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, the study finds.

Ovum says China currently accounts for over half of installs.

According to Escofet, the bulk of this is driven by its huge Android independent app store sector. "China will also end up as the top-grossing country, helped by its huge mobile gaming industry," he says.a