According to a new research by Gartner, global App downloads will exceed 102 billion this year. 90% of these App downloads are made from Apple’s App Store on iOS, and Google’s Play Store on Android. These downloads will lead to over $26 billion in revenue from applications.
The research shows that 83 billion Apps, or 91% of these, are actually free Apps, which continue to dominate the Application Market. As for In-App Purchases, due to current application marketing models, they are becoming a major portion of the revenue generated from applications. This year, In App Purchases will account for 17% of the revenues ($4.42 Billion) but in the next four years, the percentage will rise to about 48%.
Even though many paid Applications gave In-App Purchases in them, it seems people still don’t mind dishing out extra cash for them. According to Brian Blau, a research director with the analyst group, “We see that users are not put off by the fact that they have already paid for an app, and are willing to spend more if they are happy with the experience,” “As a result, we believe that IAP is a promising and sustainable monetization method because it encourages performance-based purchasing; that is, users only pay when they are happy with the experience, and developers have to work hard to earn the revenue through good design and performance.”
The research also shows that free Apps account for majority of the App downloads, at 60% on the Apple App Store, and 80% on the Google Play Store.
As for the rest of the revenue, which is about $21.58 billion, Gartner does not specify how much of that comes from advertising and paid Apps, or if advertising is included in those numbers in the first place. Also, Gartner does not tell us if iOS generates more revenue from Apps, or Android, however, a recent report by Distimo indicated that despite Android’s domination in the handset sector, the iOS App Store is still ahead in terms of Apps and generates more revenue.
The research also points out that users of both operating systems are more likely to spend money on Applications when they are new users, than those who have been with a device for a while, which is why Android’s revenues are up by 67% in the last few months, whereas Apple’s are only up by 15%, since many Android devices were recently released, and hence they gained many new customers willing to spend money on Apps.
“We expect average monthly downloads per iOS device to decline from 4.9 in 2013 to 3.9 in 2017, while average monthly downloads per Android device will decline from 6.2 in 2013 to 5.8 in 2017,” Blau writes. “This relates back to the overall trend of users using the same apps more often rather than downloading new ones.”
However, it is speculated that Google Play’s share in the App downloads may drop to 47% by 2017, as many domestic Android App markets (such as the Amazon App Store, 360 Market) will generate a big portion of the downloads.