App economy to be worth $6.3 trillion dollars, claims report

App Annie has released a report into the future of the App Economy, predicting massive growth in revenue for mobile applications over the next four years.

App Annie estimates the global app economy in 2016 was worth $1.3 trillion across the three major types of monetisation: all mobile app stores, in-app advertising and mobile commerce. This sum was driven by 3.4 billion people spending a total of 1.6 trillion hours in apps, which on average equates to $379 in apps across these three forms of monetization per person during 2016, or $0.80 per hour per person.

The value of the global app economy will expand from $1.3 trillion in 2016 to $6.3 trillion in 2021 thanks to device base growth and increasing engagement with apps. The user base will nearly double from 3.4 billion people in 2016 to 6.3 billion in 2021, and time spent in apps will grow even faster, from 1.6 trillion hours in 2016 to 3.5 trillion in 2021.

Annual spend per user will rise from $379 to $1,008 on a global basis, which the report predicts will be driven by innovation and the increasing transition from physical transactions to mobile. For example, Alibaba announced that mobile accounted for 79 percent of the total transaction value generated in its China retail marketplaces in the fiscal year in 2017, up from 65 percent in fiscal year 2016.

The report also predicts that the APAC region will grow faster than Western nations, due to fewer traditional constraints of legacy systems such as banking, international transfers and the weighting of those economies towards older consumers.

Japanese consumers generated an average of $13.98 per hour spend and, in aggregate, spent more than 68 billion hours in apps in 2016. This is a function of relatively high spend levels in app stores and mobile commerce. Japanese people spent on average $123 per device last year in app stores, compared to the next closest countries (Singapore and S. Korea) at $67 per device.  In contrast, the two largest economies — the United States and China — generated $2.36/user per hour and $2.01/user per hour in 2016, respectively.

App Annie predicts that consumer spend across all mobile app stores will grow at 18 percent CAGR to reach $139 billion in 2021. iOS App Store will continue to be the largest single store, growing to over $60 billion in 2021, with Google Play plus third-party Android combined, forecast to overtake iOS App Store in 2017.

China is the most significant driver of this growth in Asia and globally, thanks to a young, wealthy and mobile-first population. App Annie forecasts that China will generate over $56 billion in app store spend by 2021. Delving a little deeper into app store monetisation, Games continue to represent the majority of this segment during the forecast period, growing from $50 billion in 2016 to $105 billion in 2021. Demonstrating the adoption and growth of app habits and new methods of monetisation, non-game app spend is projected to triple in size from $11.5 billion in 2016 to over $34 billion in 2021 as video, music, dating, education, and productivity drive app store purchases and subscriptions.

Meanwhile, global in-app advertising spend is set to nearly triple in size from $72 billion in 2016 to $201 billion in 2021. Asia-Pacific is projected to outpace other regions, growing at a 25 percent CAGR to hit $77 billion.

For the full report, please visit this link.