App Annie forecasts 33 percent growth in consumer expenditure on app stores

App data analytics and insights company App Annie released its second annual App Store Forecast Report, which projects global app store growth for the next five years. App Annie forecasts consumer spend on apps to reach USD 139 billion in revenue in 2021 as maturing markets see strong growth in gross app store spend per device and increases in in-app subscriptions.

The five largest mature markets, which include the U.S., China, Japan, South Korea, and the United Kingdom, are expected to account for 85 percent of global consumer spending in 2021. Meanwhile, emerging markets, particularly India, Mexico, Brazil and Indonesia, are projected to fuel downloads in mobile app stores. Global downloads across all mobile app stores are forecasted to increase 20 percent annually, reaching 352 billion in 2021.

 

"Apps are transforming the way consumers interact with products, services, content and brands, across verticals globally. Apps are creating an intimate, highly-personalised environment for brands to engage with users. Consumers are already spending twice as much time in apps than they did two years ago, which means it is increasingly critical for companies to build a successful business on apps if they haven't already," said Danielle Levitas, SVP of Research, App Annie.

Key highlights from the report are as follows:

The app economy is increasingly global. App adoption of each region depends on three factors: varying consumer behaviours, cultural sensitivities and preferences, and most importantly, where the respective market is placed within the App Annie App Market Maturity Model, which is used to assess where a market is along its path toward maturation. Emerging markets are expected to see a boom in downloads as nearly three billion more consumers are introduced to apps over the next five years. For mature markets, users are increasingly engaging with, and spending on, apps.

The APAC region is projected to remain a global leader in the app space, leading by both downloads and revenue. Of the APAC markets, China is predicted to lead in both app store downloads and consumer spend, which are growing at an annualised rate of 19 and 24 percent from 2016 to 2021, respectively. India is expected to be also emerges as a strong driver for downloads through 2021.

For 2017, consumer spend in Android stores is forecasted to surpass the App Store. This is driven by increasing global app installs in Google Play and third-party Android stores. However, over the next five years, Apple's comparatively affluent customer base is expected to continue to spend more revenue per device. App Annie projects the iOS App Store to generate more than USD 60 billion in gross consumer spend in 2021, maintaining its top position in app store revenue.

In-app subscription revenue from non-game apps, particularly within the media streaming, news and dating categories, is rapidly increasing. App Annie forecasts revenue for non-game apps to grow at an annualised rate of 25 percent - reaching USD 33.8 billion in 2021.

In 2016 alone, games represented 11 percent of time spent and 39 percent of all downloads, yet generated an impressive 81 percent of consumer spend via stores. Given gaming's ongoing shift to mobile and consumers' ease with spending on games, we expect this category to continue to generate the majority of revenue in 2021.