Revenue paid to publishers from Google Play and iOS App Store increased by 40 per cent in 2016, hitting $35 billion, driven by a 15 per cent rise in downloads and more and more time being spent in apps.
Revenue on the iOS App Store alone grew by nearly 50 per cent, increasing its lead as the biggest revenue-generating platform. This was largely due to China, which contributed nearly half of the growth.
When third-party Android stores and advertising revenue are also included, the 2016 total amount paid to publishers increases to nearly $89 billion.
As before, sales were led by gaming apps, which generated 75 per cent and 90 per cent of revenue on the App Store and Google Play respectively.
Shopping and video streaming
Other than games, shopping saw some “impressive gains”, with time spent in these apps growing by 30 per cent year-over-year in the US for the busy buying month of November.
France, Germany and the UK experienced some of the highest growth rates in the number of sessions in shopping apps this past year.
Another popular category was video streaming.
In 2015 App Annie noted that “the battle lines were being drawn” but now “the war between the major video streaming services is in full swing, and revenue has exploded”.
Last year, by active users, YouTube was by far the leading video streaming app in the US and UK. But in terms of revenue, Netflix led the way in both countries thanks to the introduction of in-app subscription purchases in late 2015.
In China, Youku edged out iQIYI for the top spot by active users, though iQIYI held the top spot in App Store revenue.
Youku and iQIYI are “roughly” China’s counterparts to YouTube and Netflix, but App Annie noted that the Chinese video streaming landscape won’t necessarily imitate the West in the long run.
Live streaming apps like Inke, which continued to gain momentum in 2016, have the “potential to shape a unique future of for mobile video streaming in China and the rest of Asia”.
Worldwide downloads grew by 15 per cent from 2015 to 2016, increasing by more than 13 billion across iOS and Google Play. In total there were more than 90 billion downloads from the two stores.
As in 2015, Google Play accounted for most of the growth, especially in emerging markets. iOS downloads increased more in 2016 than they did in 2015, driven largely by China, which accounted for nearly 80 per cent of its download growth.
Time spent in apps grew by 25 per cent, increasing by more than 150 billion hours year-on-year to reach nearly 900 billion hours in 2016.
China claimed the top spot for iOS App Store revenue in 2016, having taken the lead for downloads last year.
With more than $2 billion in publisher revenue, China’s Q4 was the biggest quarter for any country in App Store history.
This “spectacular” performance suggests that Apple’s major focus on China (such as the $1 billion investment in Didi Chuxing) is paying off as China’s economy continues to grow, the report said.
App Annie believes that “as a publisher, if you aren’t in the China app market, you may be missing out”.
India grew in 2016 to pass the US as the number 1 country by Google Play downloads, thanks to an increase from around 3.5 billion downloads in 2015 to more than 6 billion downloads in 2016.
The country’s smartphone penetration is only around 30 per cent, “so there is huge potential here”, the report observed.
“2017 is set to be another banner year for the app ecosystem. As technology and business models continue to evolve, apps will play an even greater role in transforming, disrupting and creating opportunities for companies and industries both old and new,” App Annie concluded.