Global market size and segmentation
The mobile app market is growing. And it will continue to grow.
Information about market volumes differs from one Internet resource to another. We decided to trust App Annie, an American company that deals with business analytics. In 2016, compared to 2015, the number of global downloads grew by 15%, the time spent by users in apps increased by 25%, and the development leaders Google Play and iOS App Store generated 40% more revenue.
The majority of revenue is generated by game applications. The discovery of 2016 was the Pokemon Go game. The app was released in July, and 5 months later Pokemon Go was among the top 5 apps in terms of global revenue. There are 2 alternative perspectives on this explosion in popularity:
1. The app did not fight with competitors, but simply colonized a free market niche: it was often played at “non-mobile” times, for example, on the way home.
2. Developers Nintendo, Google (since 2015 Alphabet) and The Pokémon Company had enough money and PR resources to popularize any app.
Another segment that grew significantly in 2016 is mobile shopping. In the US, users began spending 30% more time in shopping apps compared to last year. The maximum activity of these apps in Europe was observed in France, Germany and the UK.
The honorable third place in terms of session growth rate is occupied by sports broadcasting and streaming applications.
Less words, more statistics.
Nielsen has an alternative point of view. According to its reports, users most often use games, weather and maps. The authors of the Forbes.ru resource even joke on this topic: “If you want to interest a person in the weather, give him a smartphone”. The graph is broken down into applications for smartphones and feature models (for which no one has been developing software for a long time).
Nielsen divided the information into 4 groups: iPhone, Android, BlackBerry and Windows Mobile users.
In 2013, Digi-Capital conducted research on the most popular apps. Even then, they realized that in 2017, half of the apps used would be gaming apps.
On average, users use up to 30 apps per month. A lot of time is spent on social networks and messengers, a little less on video streaming, navigators, cab services, etc.
The number 30 seemed excessive to me, so I counted how many different apps I use per month. 12. Even though I am considered a passive, non-advanced user.
Asian users have the highest propensity to regularly access applications of various types.
The global ranking of apps and developer companies can be found here.
Growth in usage, downloads, and publisher revenues
While researching the mobile app market, 3 factors are taken into consideration:
- Usage time shows how long and how often the user interacts with the application.
In 2016, that time reached 900 billion hours on an annualized basis. This means that an Android owner on average spends about 2 hours in apps every day.
Just realized that I spend about 2 hours as well. And I broke out in a cold sweat. I could have used that time for sports. Or studying Spanish, for example.
Most countries saw year-over-year growth of over 20%, with the States seeing 25% growth. The top global growth categories were Connectivity, Social Apps, and Video Players and Editors. It’s not hard to guess that shareholders of Chrome Browser, Facebook and YouTube have long since forgotten about the word “loss.”
- The growth of global downloads has consistently demonstrated positive dynamics. Annual downloads exceeded 90 billion, and their growth on the iOS App Store and Google Play amounted to 13 billion.
It’s interesting to note that 80% of the increase in iOS downloads was due to Chinese users.
As noted earlier, the most used apps were and still are games, but if we talk about the growth in the number of downloads, then in the App Store were “Finance”, “Travel”, “Photo and Video”, and in Google Play “Productivity”, “Tools” and “Social”. The difference in categories is indicative of different target audiences. And of the fact that iOS is present in markets where a set of standard apps have been installed before.
- Company revenues. In 2016, publishers on the App Store and Google Play were paid $35 billion in revenue. The annual growth rate was 40%. Revenues on iOS alone grew by 50% – largely thanks to China.
We’ve talked a lot about games. And we’ll keep talking, because in 2016, 75% and 90% of all App Store and Google Play revenues came from games.
It’s not just app stores that generate revenue, but also independent Android stores and in-app advertising. If you take these factors into account, you get the revenue paid to publishers in 2016 – $89 billion.
A few words about the publishers
Forbes estimates that there are now 2.3 million mobile app developers in the world. This means that every eighth developer is working on increasing the functionality of your smartphone.
You should not be deceived when looking at the numbers of the last line. A small number of developers create very successful projects and, as a consequence, earn a lot of money, while the vast majority fail in their attempts to launch a new application.
Peculiarities of development in the post-Soviet space
In the last few years, the post-Soviet space has seen an increase in the number of people willing to develop iOS and Android apps.
Speaking of the post-Soviet space, I consider Ukraine, Russia, Belarus, Armenia and Moldova. The region employs 15250 specialists in 2328 companies registered on the Elance outsourcing market. This is the largest IT market in Europe.
Ukraine ranks second in the number of IT specialists. In Europe, it is outpaced only by the UK. Ukraine is home to 9,272 freelancers, i.e. 16% of the total number of European developers.
The authors of the Yalantis resource believe that the more developers are located in a particular region, the fairer the price/quality ratio of services. As for post-Soviet countries, prices are distributed unevenly.
The most popular price for IT services is $20/hour, while the highest cost is over $100/hour. Russia is the only country in the region where more than 1% of companies and 2.2% of individuals charge 51-100 $/hour. About 90% of the region’s representatives receive $30/hr.
The average price for services is $25/hour. But if you want to have at least some guarantees of quality software development, professionals recommend working with individuals with a fee of $31-40/hour.
The Russian rating of applications and developer companies can be found here. The Ukrainian rating is available here.
Andrey Terekhov, CEO-specialist at Ruward, shares some interesting observations.
1. Often contractors do not have a huge / beautiful / fancy office in the capital. More and more productions are opening in the regions. This is because the foreign customer does not care where the developers are physically located. All that matters is the efficiency of the work. As for costs, in the regions you can save a lot on salaries and office rent.
Moreover, this hypothesis is true only in the mobile application market. The web development market is more mature and, as a rule, works for domestic developers who find it more convenient to meet in person.
2. For foreign customers, the attractiveness of the Russian/Ukrainian market has grown 2-3 times in recent years. If I had to explain the reasons in a nutshell, I would say this: “We are smart and cheap”.
Monetization or how to make money from mobile apps
As someone who has never spent a dollar on apps in my entire life, I was curious to know where these millions earned by publishers come from.
The habrahabr bloggers take a look at the 6 most popular ways to monetize mobile apps.
- Free app with ads
There are no restrictions on downloading. The developer’s dream is to get the maximum audience, collect massive data about them and place targeted advertising. Facebook is an example. In the second quarter of 2015, the social network reported a 151% growth in advertising revenue.
- Freemium
The application has basic functions and additional functions that can be purchased for money. The main thing is to get the user interested enough to want more. An example is Angry Birds. Rovio provides the app for free, but some additional levels are hidden until you pay for them.
- Paid applications
The simplest model. Using all available and inaccessible advertising methods, you need to convince the user to buy the application. An example is Calendar 5, estimated by the developer at $4.99. It is a smart calendar for corporate tasks. But it is worth remembering that 90% of paid programs are downloaded less than 500 times a day.
- In-app purchases
You can sell anything you want – real clothes, accessories, fishing rods, as well as virtual things – character skils, game currency, personal rating.
The MeetMe dating app, for a modest fee, allows you to increase visits to your profile.
- Subscription
You want more content, you pay for it. Example – Umano application – the program provides users with access to news podcasts with a limited number of them on a free basis. If a user wants to get unlimited access to the service’s content, he or she can pay for a subscription.
- Sponsorship
In this case, it is not the users who pay, but the brand owners. To popularize their company, advertisers pay users for performing certain actions. Part of the payment goes to the developers.
An example is RunKeeper. If a user walks a certain number of steps or cycles a certain distance, they get paid. Brand loyalty grows, the publisher gets its interest.
The most popular way is in-app advertising, the most lucrative way is subscription.
Conclusions
The mobile app development market is still not saturated. The same cannot be said about the labor market. Every third university graduate has at least once thought about changing profession, every tenth has taken it up and done it.
Programmers are needed. Mobile app developers are in demand. But only if the work is of high quality.
Koloro Branding Agency knows firsthand what it means to do quality work. Dozens of successful brands, selling UTPs and catchy names.
Call. You’re welcome.
