Mobile app industry revenue statistics: Where’s the money come from?

By Priceonomics

The average American spends five hours per day on their phone.

For many smartphone users, those 300 minutes spent streaming music, scrolling through newsfeeds, and throwing virtual Poké balls every single day represent an enormous timesuck.

But for app developers, it represents a huge opportunity.

How big is this opportunity? Is the opportunity still growing? And how are developers are taking advantage of this opportunity?

We researched mobile app industry revenue statistics to answer these questions.

We found that while most revenue comes from sales of the apps themselves, in-app purchases and advertising within apps are an increasingly important part of the market.

Up-front, advertising, and in-app purchase revenue

We began our analysis by looking at how apps make money. While advertising is a large proportion of the revenue from the browser-based web, how does this compare to revenue from up-front payments for apps (“paid-for”) and from in-app purchases in the app market?

The following chart shows the percentage of revenues from the three major app revenue sources in 2015. The data is estimated by Statista based on Apple and Google’s worldwide app store data.

Source: Statista

Paying up-front for apps is the largest revenue channel. It is responsible for just under 60% of all revenue.

The game Minecraft, which is played by both children and adults, tops the paid-for app charts. The popularity of the game allows for a relatively high upfront cost of $6.99. Minecraft also generates revenue through in-app purchases.

Moji Maker is the second most lucrative app. It costs $0.99 — the most common cost for games.

Though charging users upfront to use apps is the dominant revenue generating model, not all apps are created equal. In-app purchase revenue, which is the second most lucrative revenue channel (31% of total revenue), is used almost exclusively by games like Pokémon GO(discussed more below).

In general, advertising generates the least revenue — just under 10% across the entire market — but streaming media apps like Youtube, Spotify, and Hulu generate a large percentage of their revenue from ads.

iOS vs android app revenue

We’ve just explained how revenue is divided between revenue channels, but how much of this money comes from Apple’s App Store versus Google’s? The following chart shows the proportionof worldwide app revenue that came from each company’s store in the first quarter of 2015.

Source: BGR

Apple’s App Store generates almost double the revenue of the Google Play store. This is true despite the fact that twice as many apps were downloaded on Google Play. It seems that Apple App Store users are more likely to pay for apps.

Mobile app market revenue growth

The app revenue of the two stores was an estimated $45 billion in 2015. How quickly is that revenue number increasing? The following chart displays the size of the app stores’ revenues from 2011 to 2015, with projections for 2016 and 2017.

Source: Statista

App revenues, which were just $8 billion in 2011, grew to an estimated $45 billion in 2015 — an increase of over 500%. And according to these projections, app store gross revenue could hit $77 billion in 2017.

Some industry insiders even expect revenues to surpass $100 billion by 2020. These growthprojections are based on Apple’s growth in China and Google’s growth in Brazil and Indonesia.

What revenue channels are driving this growth? We dove into worldwide app data from Statista to see if advertising, in-app purchases, or paid-for apps are growing fastest.

Source: Statista

Through 2013, payments for downloading apps accounted for over 80% of all revenue. But the dominance of that revenue channel is shrinking.
In-app revenue is showing the fastest growth, going from only 9% of revenue in 2011 to over 30% in 2015. By 2017, Statista projects that in-app purchases will make up the largest proportion of app revenue.

This post originally appeared on September 13, 2016 on the blog of SurveyMonkey Intelligence, a provider of competitive intelligence for the mobile app industry.

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