App Downloads & Revenue: Q3 2023 Records

Record-Breaking Revenue Forecast for the App Economy in Q3

A recent analysis projects that the third quarter will witness unprecedented revenue generated through applications and games. Data from App Annie indicates that global consumer expenditure on apps and games will reach $34 billion during Q3, representing a 20% increase compared to the same period last year.

This surge in spending suggests a sustained shift in consumer habits, influenced by the COVID-19 pandemic. Individuals are increasingly relying on apps for a diverse range of activities, including entertainment, shopping, professional tasks, and educational pursuits.

Past Data Integrity Concerns Regarding App Annie

It is important to acknowledge that App Annie previously faced scrutiny for manipulating data in prior years. This involved utilizing confidential sources and subsequently misrepresenting the methodology used to prevent such occurrences to its client firms.

The resulting securities fraud led to a settlement exceeding $10 million with the SEC, as investment decisions were based on the inaccurate information provided.

Despite these past issues, App Annie’s current data remains a valuable resource for understanding the mobile market. The company continues to be a leading provider of insights for app publishers, marketers, and investors within the mobile ecosystem.

Key Drivers of App Revenue

In-app purchases and mobile subscriptions are the primary contributors to app revenue in Q3. These areas are currently subject to legal challenges and evolving regulations, as Apple and Google strive to maintain their commission structures on app store transactions.

Gaming continues to dominate consumer spending, although non-gaming revenue, particularly from subscriptions, has been steadily increasing in recent years.

While Android platforms currently lead in the number of downloads, iOS consistently generates higher consumer spending.

Download Growth and Emerging Markets

Total app downloads in Q3 are projected to increase by 10% year-over-year, reaching a record 36 billion. This growth is largely driven by Google Play and the expanding mobile market in emerging economies like India and Brazil.

Significant growth has also been observed in Brazil, the Philippines, and Mexico, attracting the attention of global publishers seeking new opportunities within the Latin American market.

The travel, education, and medical industries are fueling download growth, reflecting the ongoing impact of the pandemic. Travel app downloads have risen by 35% quarter-over-quarter on Google Play and 15% on iOS, coinciding with the summer travel season and increased vaccination rates.

Medical and education apps also experienced increased usage as individuals turned to mobile technology for online learning, medical appointments, COVID-19 testing, and vaccine scheduling.

iOS Revenue Dominance

iOS continues to generate the majority of revenue from mobile apps, accounting for 65% of global consumer spending through app stores. This trend has remained consistent over the past four quarters.

Consumer spending on iOS apps increased by 15% year-over-year to $22 billion, while Google Play saw a 15% increase to approximately $12 billion. Gaming apps account for 66% of this total expenditure across both app stores.

Outside of gaming, iOS captures 76% of consumer spending. Growth in non-gaming categories is driven by entertainment, photo and video editing, social media, and dating applications.

Regional Market Performance

The United States and China represent the largest iOS markets for consumer spending. Japan, the U.S., and Taiwan have demonstrated the strongest growth in this sector.

On Google Play, the U.S., Japan, and South Korea are the leading markets by consumer spend. Japan, Russia, and Australia are driving the most significant growth.

Focus on User Engagement

Beyond revenue and download figures, there is growing interest in understanding user engagement with existing apps. This includes metrics such as active users, session frequency, and retention rates.

A report from Sensor Tower, a competitor to App Annie, provides insights into these engagement metrics for both games and non-game applications.

The top 500 apps worldwide currently average 91.7 million monthly active users, an 8.4% increase year-over-year during the second quarter.

Business apps have exhibited the highest compound annual growth rate (CAGR) between Q1 2018 and Q2 2021, increasing by nearly 42% over that period.

Genre Performance and Pandemic Impact

In Q2 2021, consumers spent the most time using entertainment apps, with the top 100 averaging nearly 29 minutes of daily usage.

Among games, shooter genres, such as PUBG Mobile and Garena Free Fire, had the highest number of daily active users, averaging 7.6 million. Hypercasual games led in weekly active users.

Sensor Tower attributes the initial surge in active users to the COVID-19 pandemic, as individuals increasingly relied on mobile devices during lockdowns. However, growth has now returned to pre-pandemic levels following a slight dip in Q3 2020.