Global app store gross revenue will hit $51 billion this year and exceed $101 billion in 2020, thanks to strong adoption in developing economies and apps capturing “greater wallet share” in mature economies, according to App Annie (click image to enlarge).
Meanwhile, downloads will hit 284 billion in 2020, largely due to a rise in smartphone adoption in emerging markets.
The iOS App Store will lead the way but only until 2017, after which Google Play and third-party Android store revenue will pass iOS due to the popularity of Android devices, the report predicted.
Revenue in the Americas and EMEA will nearly double over the next five years from 2016 levels, but both will be outpaced by the growth in APAC.
The report said this region will grow to $57.5 billion in 2020, with China driving more than half the revenue in the region by the end of the forecast period.
While games revenue will dominate through the forecast period, revenue for apps excluding games will exceed 2015 levels more than four times by 2020, accounting for more than 25 per cent of all app store spend (click image to enlarge).
Time spent in apps from categories such as social, shopping and transportation suggests that advertising and commerce will form a significant proportion of economic activity in the app ecosystem beyond the $101 billion being projected in store sales.
App Annie forecasts downloads to grow 33 per cent to 147.3 billion in 2016 and reach 284.3 billion in 2020, as smartphones continue to proliferate in emerging markets and reach ever-growing numbers of first-time app users (click image to enlarge).
This can be attributed to rapidly growing smartphone adoption in under-penetrated emerging markets like India, Mexico, Brazil and Indonesia.
Meanwhile, iOS downloads are forecast to grow 46 per cent to 35.2 billion over the same time period.
Downloads on third-party Android stores are set to grow by 158 per cent to 80.3 billion, mostly because of growth in China as “lower-tier cities” continue to adopt Android smartphones.
“China drives the most downloads of any country — roughly one out of every three — and we expect it to remain the greatest contributor to downloads through 2020, even as India’s app store downloads soar,” the report said.
India will be a significant contributor to download growth thanks to the influx of smartphones priced below $50.
The report also observed that mature markets like the US are shifting from a “download growth phase” to one characterised by usage and revenue expansion.
It also said there will be “explosive growth” in mobile commerce and advertising revenue which will include apps made for wearables, TVs, virtual and augmented reality, Internet of Things and automotive.