The market for apps will continue to expand with global consumer spend in app stores reaching $156.5 billion in 2022. This is up 92% from $81.7 billion in 2017.
So says the latest forecast from App Annie, which predicts that global downloads will grow 45.0% from 178.1 billion in 2017 to reach 258.2 billion in 2018. This growth will be driven by a dramatic increase in smartphone install base from 3.9 billion in 2017 to 6.1 billion in 2022. First time smartphone buyers in emerging markets will lead this device growth.
Consumer spend growth comes as a result of a rapidly growing installed base and from increasing spend per device in more mature markets. Global average spend per device is projected to rise from $20.94 in 2017 to $25.65 in 2022, while annual average spend per device in Japan will exceed $140 by 2022 — this is nearly six times the global average and by far the highest in the world.
Download growth in the EMEA region is led by immature, but rapidly growing markets such as Egypt, the Ukraine and Poland. Russia, a large market that’s entering the Expansion phase of maturity, continues to experience strong download growth.
Growth in the Americas is driven by large emerging markets like Brazil. However, overall growth in the region is tempered by the mature US market as it moves deeper into the Expansion phase described previously.
APAC is driving nearly two-thirds of the global spend as China remains the world’s largest market, hitting $62.4B, or nearly 40% of worldwide spend. Markets such as India, Indonesia and Vietnam, as well as Tier 3+ cities and rural areas of China, remain deep in the ‘Experimentation’ phase of app market maturity. All will see extensive download growth through 2022.
Growing spend per device in mature markets is the predominate driver for global increases in app store spend. As users increasingly rely on, and get value from, apps, their willingness to spend increases. Spend per device growth in the Americas is led by the US, which will see app store consumer spend nearly double by 2022. US annual spend per device will exceed $60 in 2022, up nearly 50% vs. 2017.
The rapid growth in APAC is driven by highly mature markets, namely South Korea, Japan and Tier 1 & 2 Chinese cities entering the Maturation phase characterised by rapid spend increases.
EMEA has a number of very mature markets, including the UK, France and Germany. All are expected to see strong spend growth over the next five years.
The report also predicts that mobile will increasingly capture share of wallet, and by 2022, average spend per device for apps will reach $25.65. Alongside this, the global smartphone and tablet install base will increase by 56.4% from 3.9 billion in 2017 to 6.1 billion in 2022. In combination, this will fuel overall growth in consumer spend in apps.
New users are expected to have a lower average app store spend, while presenting valuable opportunities to publishers, through in-app advertising, m-commerce, as well as loyalty and brand building.
Games often pave the way during the ‘Experimentation’ phase of app maturity. Over time, opportunities greatly expand for publishers from other verticals and they increase their investment in this channel. Over the next 5 years, apps outside of games will capture an increasing share of consumer spend in the app stores, however. From 2017 to 2022, spend in apps outside of games will increase by $75 billion.
Subscription revenue has contributed to this growth, with industries such as dating, music and video streaming heavily utilizing this model on mobile. In fact, 8 out of the top 10 grossing apps outside of games worldwide in 2017 incorporated subscription options.