App Stores to Clock $26 bn Revenue This Year; In App Purchase Will Account for 48% Revenues by 2017

Total revenue from mobile app stores will reach $26 bn in 2013, up from $18 bn last year, according to recent report. The report also cited that, free apps will account for 91% of total downloads in 2013.

In-app purchases (IAPs) will account for 48 percent of app store revenue by 2017, up from 11% in 2012. Mobile app stores will see annual downloads reach $102 billion in 2013, up from $64 billion in 2012, according to the Forecast: Mobile App Stores Worldwide 2013 report by Gartner.

“Free apps currently account for about 60 and 80 of the total available apps in Apple’s App Store and Google Play, respectively,” said Brian Blau, research director at Gartner. He also said that “iOS and Android app stores combined are forecast to account for 90% of global downloads in 2017.”

Average monthly downloads per iOS device is expected to decline from 4.9 in 2013 to 3.9 in 2017, while average monthly downloads per Android device is expected to decline from 6.2 in 2013 to 5.8 in 2017. The research firm said that users using the same apps more often rather than downloading new ones, as the reason for this trend.

IAP is expected to become a major monetization method for apps stores and developers. Smart devices are reaching more mass-market consumers whose willingness and/or affordability to spend on IAPs is lower than early adopters, but this trend will slowly change. IAP will be seeing a positive growth trend through 2013 and 2014, the report said. IAP purchases will drive 17% of the store revenue in 2013 and increase to 48% in 2017.

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Previously research has shown that IAP contributes to a significant amount of Apple’s App Store revenue from iPhones worldwide, but other platforms have not been able to reach similar levels, but analysts expect they will also see IAP contributions increase in the future.

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