The behaviors of mobile users tend to evolve as market matures. New apps, technologies, and activities shift from a position of novelty to becoming deeply-embedded in people’s lives.
Understanding these trends is crucial for companies that want to maximize revenue generation and target mobile users in a range of markets around the planet.
App revenue grows as a market matures
Mobile markets typically mature and evolve through three stages before they start to generate significant revenue, according to research by AppAnnie.
App downloads grow quickly in an emerging market like Indonesia or India, as new mobile device owners explore the digital landscape.
Engagement increases as mobile users start to build habits and develop loyalty to certain apps.
Mobile users become paid-up consumers and start to spend money on app experiences.
App developers should be patient. If an emerging mobile market features high levels of downloads then it’s likely that revenue will follow as the market evolves and users become more committed to mobile apps.
Emerging markets are driving global app downloads
Three of the top five markets for app downloads are emerging markets, so software development companies should pay attention to the shifting landscape.
Global app downloads grew 35% between 2016 and 2018, to exceed 194 billion. China retained its lead, with 70% growth and nearly half of all app downloads.
India overtook the United States to take second place, with a growth rate of 165%. Brazil and Indonesia came third and fourth, with growth rates of 25% and 55%, respectively.
India, Indonesia, and Brazil may not be highly-profitable markets right now; but all three have large populations and could become lucrative markets as mobile use shifts towards ‘ubiquitous’ among their citizens.
Advanced economies still lead app revenue charts
While developing nations might be entering the charts for app downloads, they haven’t disrupted the leaderboard for revenues – yet.
Global app store revenue grew 75% between 2016 and 2018, to reach $101 billion. China built on its lead, with 140% growth and nearly 40% of total consumer spending in 2018.
Meanwhile, the United States pulled ahead of Japan with 70% growth against the latter’s 30%. South Korea and the United Kingdom are further behind – although, with the growth of 80% and 55% respectively, they’re hardly slowing down.
Again, these positions aren’t surprising given the relative immaturity of emerging markets like India, Indonesia, and Brazil. But given time, these more advanced markets might experience saturation as emerging market users start to spend cash on mobile experiences.
Video, photography, and entertainment are the fastest-growing app categories
An app category’s popularity can be measured by how much time users spend using these apps per device.
Time spent in apps grew 50% globally between 2016 and 2018. The top five fastest-growing categories were Video Players and Editors, Entertainment, Photography, Tools, and Finance.
App developers could consider these categories for future investment.
Mobile users clock-up more screen time in emerging markets
Daily screen time seems to decrease in mature markets. Mobile users in Indonesia spent over four hours in apps each day, while no North American or European countries reached even three hours.
Mobile-focused companies represented 95% of all USD valuations at IPO
Companies that use mobile as either a primary or secondary point of interaction made up over 80% of the 48 technology IPOs in 2018 on the NYSE and NASDAQ stock markets. Measured by USD valuation, this percentage increases to 95%.
Top three largest IPO valuations in 2018 (all mobile-focused):
- Spotify ($29.5B)
- Pinduoduo ($24B)
- Tencent Music Entertainment ($21.3B)
Average valuation at IPO was over four times higher for companies with a mobile focus. It seems clear that mobile experiences allow companies to reach users in a way that adds significant value.
Generation Z are the most engaged mobile users – except for gaming
Generation Z (born 1997 onwards) are even more mobile-focused than Millennials (born between 1981 and 1996) – apart from when it comes to gaming.
Gen Z spends 20% more time and engages with its favorite apps 30% more often than the rest of the population. However, millennials spend 75% more time each month in their favorite games and access them 50% more often.
Mobile experiences are clearly crucial to Gen Z and this should be a primary consideration for any kind of business that’s looking to reach and build engagement with young people.
Subscription-based entertainment apps generate the most revenue
Consumers more than doubled their spending on non-gaming apps (120% growth) between 2016 and 2018 – driven heavily by in-app subscriptions.
The five most lucrative non-gaming apps in 2018 (measured by consumer spend) all contained in-app subscriptions. All five are entertainment-based (music, video, and dating).
Mobile users will continue to evolve in terms of their relationships with mobile devices and apps. But we can identify clear trends in advanced economies that enable us to make predictions about the future landscape for mobile app use in emerging economies.