Why The Concept Of Peak App Is Just An Urban Legend

Sometimes an unstoppable force is simply that …

The chance of the apps economy hitting peak app is getting less likely by the day. In 2014, Applause’s Editor-in-Chief (and noted orbuculum enthusiast) Dan Rowinski said the idea of the app economy reaching “its economic and cultural zenith” was absurd. Three years later and it is hard to disagree.

Market intelligence company Sensor Tower’s latest quarterly report said non-gaming apps recorded global year-on-year revenue growth from in-app purchases and subscriptions of 56%. Total consumer spend over both major app stores totaled $2.43 billion in the second financial quarter of 2017, with $1.9 billion spent in the App Store alone.

Netflix was the highest grossing mobile app for the third consecutive quarter, going from $46 million in Q2 2016 to $153 million a year later—a growth rate of 233%. The company recently released second quarter financials that showed an overall annual growth rate from all channels—deemed to be set-top boxes, personal computers and mobile platforms—of 36%, which makes the increase in mobile revenue even more impressive, Sensor Tower said.

Facebook-owned WhatsApp was the leader in terms of installs, edging out its parent company to claim overall top spot. Facebook owns four out of the top five installed apps in Q2 2017, with Snapchat the sole app in that five that is not part of the Zuckerberg empire.

And WhatsApp’s success is not likely to slow down anytime soon. According to a blog post, the app has one billion daily active users, all of whom contribute to the 55 billion messages and 4.5 billion photos sent or shared every day.

Global Install Rates Defy The Myth Of Peak App

On a global level, non-game app installs continued to prove that the app economy is unstoppable.

Sensor Tower said that there were 13.2 billion installs in the second quarter—an annual growth rate of 12% or around 1.44 billion installs. Apart from Facebook-owned properties (and Snapchat), people installed YouTube, cross-platform file transfer tool SHAREit, Uber, Spotify and Chinese mobile browser UC Browser.

The most significant element—in the United States at least—was the fact that Uber surpassed Facebook in terms of installs for the quarter, Sensor Tower said. The ride-share app was installed 6.5 million times in the last quarter compared to the six million downloads for Facebook’s core app. So much for the #DeleteUber movement.

Revenue versus install rates has still not changed. The App Store generates the cash, Google Play gets the installs. End of story.

The global disparity between iOS and Android contributes to the disparity between the two, but revenue growth on Google Play did outpace the App Store in the second quarter of 2017.

Sensor Tower said that the App Store had a year-on-year revenue growth of 52%, with Google Play showed an annual growth rate of 72%. The caveat is that the bulk of the revenue still ends up in Apple’s coffers—out of the $2.43 billion generated by non-game apps in the second quarter, $506 million went to Android apps.

“New non-game app installs increased by 3 percent on Apple’s App Store, from 4.4 billion to 4.6 billion. Google Play’s non-game app installs grew 18 percent from 7.3 billion to 8.6 billion,” said Sensor Tower’s head of mobile insights Randy Nelson, in a blog post. “Viewed in this context, Google Play’s revenue growth is somewhat dampened by the fact that Apple’s store is still generating considerably more revenue off a smaller (and slower growing) number of app installs.”

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David Bolton
Former ARC Writer
Reading time: 5 min

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