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App Revenue Beating Download Growth, Set to Double by 2020

By Steve Anderson
April 25, 2016

A Dilbert strip once sent Dilbert out on a date with a young lady, and had him note that, while it might seem like he was working a dead-end job, he was developing an app in his spare time. His date then handed him a lottery ticket and noted she'd just doubled his chances of success. A new report notes that app revenue is on the way up, and faster than the rate of new downloads, which means success in the field may not be lottery-ticket odds away.

The report from Ovum notes that, over the next five years, app revenue worldwide will more than double, growing 2.2 times current levels to reach $79 billion. App downloads, however, will grow at a slower pace of 1.8 times current levels, reaching 378 billion downloads in 2020. Better yet, revenue growth is set to be much more rapid, with the period between 2016 and 2020 representing over three times the revenue generated between 2008 and 2015.

Essentially, as described by Ovum principal analyst Guillermo Escofet, the pace of downloads will slow as smartphone markets mature and user acquisition costs escalate. Fewer new smartphones means fewer apps downloaded overall. But the apps that are downloaded will be downloaded for a good reason, which means app quality will be the primary driver of app growth. Throw in a likely increase in in-app spending, and that means download growth slows and revenue growth carries on.

Emerging markets are set to represent the biggest growth rates, bringing in the highest growth rates for both download counts and revenues. Developed markets will continue to represent the largest share of revenue, however, as emerging markets and late adopters start adding in greater quantities. The biggest destabilizing element in the emerging markets sector is China, whose massive population of comparatively late adopters in the smartphone market is proving to skew the ratings.

While, based on this report, it might be a particularly good idea to focus on app development for the Chinese market or on mobile gaming, there's certainly plenty of room here for the rest of the field. It's also likely to give app developers a better chance to realize revenues that can actually be lived on, a tactic that previously was a lot like a lottery win. It might have seemed like app development wasn't a viable career path. That may be changing, and that's good news for development.

The more possible success becomes, the more likely it is that competitors will enter the field. No one wants to walk into a dying career path, after all, and app development is proving its vibrancy with sheer numbers. More competitors mean more apps, and better quality apps too, so for downloaders and developers alike, the future is looking up in app development.

Edited by Maurice Nagle

Contributing Writer

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