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App and on-phone content sales revenues accelerating as people buy smartphones, finds Juniper

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Annual revenues from consumer mobile applications will approach $52 billion by 2016 as consumer smartphone adoption accelerates in tandem with the emergence of a mass tablet market, suggests a study by Juniper Research.

The report finds that the introduction of operator billing across leading storefronts such as the Android Market and Ovi Store had led to a dramatic rise in revenues. Likewise, the mass deployment of in-app billing options meant that, for many storefronts, post-download revenues had surpassed those of PPD (Pay-Per-Download).

While smartphones will continue to comprise the majority of app revenues over the forecast period, the report noted that tablets – which currently account for just 7% of global app revenues – would comprise 25% of such revenues by 2016.

The report observed that the app store model’s pre-eminence faced the prospect of erosion in the longer term as HTML5 – a markup language which reduces end-user dependence on plug-in app technologies – facilitates the transition to a browser-based environment. Additionally, the closer integration between web-based apps and handsets should mean that the advantage that native apps have is reduced.

This in turn offers great opportunities for content publishers to offer content on-site rather than be reliant on storefront distribution. Nevertheless, as report author Dr Windsor Holden noted, “While we are likely to see some larger media publishers – particularly those dependent on subscription revenues – migrating to a direct-to-consumer model (D2C), this is by no means true for the majority of companies. Most do not possess the scale of traffic to make D2C a viable option: in most cases, the storefront will continue to be the optimal discovery and distribution mechanism.”

The report also finds that most network operator storefronts will struggle to attract developers due to lack of scale and that more than 31 billion apps downloaded to mobile devices in 2011.
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