As a result, the number of mobile app developers have also increased rapidly which are developing thousands of apps daily. The mobile app industry is expected to generate more than $100 billion in revenue by 2020. New Business models are being created to generate revenue from apps, Hybrid models like in-app ads and in-app purchase have become proven methods to generate revenue from mobile apps.
We have covered a few points which can help in analyzing and predicting the future of mobile apps:
There is no more room in the mobile app market?
Every - day we came across articles and news that the boom in the mobile app market has reached its finishing line and there is no further growth left. Let us look some stats and figures, App Annie reports that in 2015, the mobile app industry generated incredible $41.1 billion in gross annual revenue which is well expected to reach more than $100 billion gross annual revenue in 2020. These figures are alone enough to end all speculation and mobile app market is far from being saturated. While only 46% of the world population owns a smartphone till 2016, it can be said that the mobile app revolution is just beginning with a very bright future.
As a historical fact and people tend to deny the impact of technology sooner than later, many companies have failed to realize and accept the impact of mobile apps in business and industries. Uber, Snapchat, Whatsapp are the results of young, less experienced and nontraditional entrepreneurs and have created company’s worth more than billions and in a matter of few years and already created a massive dent in working of major industries.
But still, as per the study conducted, only 18% of companies surveyed consider mobile apps as medium or catalyst to transform their business while a large percentage of companies still look mobile apps as another development channel. Companies are overlooking the fact that more people are using internet on mobile which has now become a necessity for many of them.
The mobile Platforms
The global smartphone market is dominated by two major players namely Android and iOS. As per a study by Gartner, around 86% of total Smartphone sold in 2016 was android based. iOS market share is 11.5% . A very small size , only .4% of windows based smartphones are being sold. It is clear that Apple and Google have the largest and most popular app stores and it seems that there is no competitor could dream of catching up in near future.
There are interesting statistics on the average monthly revenue earned by the mobile operating systems. According to an estimate iOS earned an average of $4,000 per month, while android is limited to $1125. Also Since 2016, over 25% of iOS developers have generated over $5,000 in monthly revenue. Only 16% of Android developers have achieved a similar feat.
But the situation changed dramatically in 2016. According to a study, a Windows Phone app fetches $11,400 on average per month, whereas iOS app generates $8,100. Android makes $4,900 in average monthly revenue. However, about 75% of developers are most favorable to Android. They plan to boost there revenues by making Android-based products.
The wide range and reach of Smartphones
With high-performance CPU’s , powerful graphics, vivid display and fast internet connection, Smartphones have converted into gaming devices. According to reports , mobile games, which accounted for less than 50% of total mobile app revenue in 2011, generated 85% of mobile app market revenue in 2015. This figure represents a total of $34.8 billion worldwide.
With an increasing number of apps , we can see changes in the time spent by users in different app categories, the following trends can be seen in mobile apps usage:
1) Customization apps, such as launchers, icons, wallpapers, and lock-screen and other device-customization apps, topped the list, with a staggering 332% rise in session usage.
2) Mobile versions of newspapers and magazines came in second, with a tremendous growth of 135%.
3) At third place , comes the productivity apps with a rise of 125% in usage.
4) Shopping and lifestyle solution apps ranked fourth with 81% growth.
5) Fitness, Health, Sport apps along with messengers and social apps gained from 53 to 54%.
Monetization Model: Various way of generating revenue on mobile apps
Direct Sales : In this model , every user pay for app download from market . Although this is not very popular method to monetize but still , large games and apps have implemented this model. Also the fact that no paid app is among the list of applications that have generated the highest revenues made this model limited to selective apps.
Freemium : As name suggests this model is combination of “free” and “premium” in which users get basic features at no cost and can access richer functionality for a one-time or subscription fee. Typically, the number of people willing to pay is relatively low. Consequently, apps using this model are focused on securing the highest possible number of downloads. Clash of Clans, Candy Crush etc. generate there revenue from this model.
SUBSCRIPTION : The subscription model is similar to freemium. The difference is that users pay to access all of the content — not only certain features. This model generates predictable, long-term revenue flow for the owner by keeping customer loyalty high.
IN-APP PURCHASES : Monetization through in-app purchases is especially common in mobile games which charge a service fee for every item sold. This model is so flexible that some games go too far in encouraging users to make purchases. As of February 2016, about 1.9% of mobile gamers made in-app purchases, and this number is rising steadily.
Monetization through Advertising
This is the most popular monetization model, The explanation for its popularity is self-evident: Users like to download free applications, and the higher the quantity of downloads, the more prominent the developer’s income. A report shows that by 2020, in-application promoting will draw in $53.4 billion in all out income every year. That means very nearly 63% of mobile screen show advertising income.
Facebook is the undisputed leader in generating revenue through in-app ads with 44.3% of all mobile ads shown being in Facebook apps. After Facebook comes Alibaba, Google and Twitter.
The Bottom Line:
As should be obvious, the tremendous development in the versatile application market isn't ceasing at any point in the near future. In spite of progressively solid rivalry in the business, engineers are applying new adaptation techniques and making all the more fascinating and valuable answers for clients. No less than two new revenue models have been appeared to be exceptionally compelling, picking up in the last couple of years.
All the models covered are efficient in their own way and a lot successful in there mode of operations and target audience. With more experience, developers and business have gained more knowledge to implement the best model for their app to generate revenue.
Hybrid monetization models, such as in-app ads and in-app purchases, are clearly becoming more popular and are adopted majorly by business and companies. Most studies show that in-app advertising is set to be a catalyst of mobile growth in future.
iOS and Android are the leading mobile operating systems, and tech giants Apple and Google own the biggest mobile app stores.Market trends show that the market will continue to generate higher and higher revenue in the future and it is quite clear that mobile app are the next big things in the future and we have just started.
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