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Tuesday, April 07, 2015

Mobile App Revenues will Reach $99 Billion in 2019

The market for mobile software applications has evolved dramatically over the past 6 years. However, just 1 percent of applications are now paid for at the point of download.

The vast majority of mobile apps are monetized through advertising, or through either subscribing to content post-download, or through a series of one-off purchases of premium content.

Annual revenues from mobile apps accessed via mobile handsets and tablets are expected to reach $99 billion by 2019, according to the latest worldwide market study by Juniper Research.

The research found that while games would continue to account for the largest share of revenues for the next five years, highest growth would be experienced in areas such as lifestyle applications -- such as dating and navigation -- and via eBook sales.

Mobile App Payment Evolution

According to the Juniper assessment, a significant proportion of online dating activity is now migrating to mobile devices -- with dating accounting for four of the top twenty grossing UK iOS apps in early-2015.

The global study findings argued that with online dating now mainstream, most net growth in the sector is likely to occur via smartphone usage.

Meanwhile, the research observed that navigation apps continued to buck the trend towards freemium and use a  Pay Per Download (PPD) model, with many apps charging a high ($50 plus) one-off price.

However, Juniper believes that even here the model was expected to transition to a subscription-based model -- with features including live traffic updates allowing for ongoing revenue streams.


Few Companies Offer App Stores

Additionally, the research confirmed that while a few mobile network operators still maintained app storefronts, these now accounted for less than 2 percent of app downloads worldwide.

"Operators have finally recognized that they cannot compete with Apple and Google from a content distribution basis. If they are to monetize content, that revenue has to come from bundling content into subscriptions or through leveraging the billing relationship," said Dr Windsor Holden, head of forecasting and consultancy at Juniper Research.

Other findings from the market study include:
  • More than 235 billion apps will be downloaded worldwide this year.
  • Baidu in China is now the second-largest storefront, behind Google.
  • Barely 1 percent of all application purchases are now paid for at the point of download.