App spending booming:
Report suggests fivefold increase in mobile purchasing
Global spending on apps, including purchases of digital and physical goods through apps, is expected to rise to $6.3 trillion by 2021, according to a report published Tuesday by app analytics firm App Annie. That forecast is a nearly fivefold increase from $1.3 trillion in 2016.
The report shows major international differences, with China leading the United States on mobile purchases. It estimated that a Chinese consumer is three times as likely to purchase groceries using a mobile device as a U.S. consumer.
“Because of the explosion of the middle class in Asia, especially China, you get a bit of a leapfrog,” said Morgan Reed, president of the App
Association. Since consumers in the United States are converting from relying primarily on desktop or laptop computers to mobile devices, market growth is slower than in China. “They didn’t have the entrenched culture of PCs at the same level we had here (in the United States), so they’ve leapfrogged into mobile,” he said.
Having a mobile-first market, however, is not a guarantee of economic success, particularly when getting people to pay up front for apps. “The problem that we’ve run into in the space is: How do you monetize when the price point is somewhere between free and $3?” Reed said.
Consumer apps rely primarily on in-app purchases, mobile e-commerce merce and advertising to generate revenue. Japan, which has a long-developed culture of buying things through phones, leads the world in hourly spending during app use, with apps pulling in $13.98 per user per hour in 2016. In the U.S., that figure is $2.36 per hour of use. India produced just $0.03 per user per hour from app store purchases, mobile com and ads last year.
The sources of apps continue to diversify away from the U.S., which dominated app development until recently. Now just a quarter of iPhone and Android apps came from the U.S. in 2016. Among the top five countries, there is “a near equal balance of apps coming from Asian and Western countries,” said Danielle Levitas, App Annie’s senior vice president of research and professional services.
“It’s a massive market opportunity for every business across every industry,” Levitas said. “The real growth is still ahead.”