Apple iOS App Store is trouncing Google Play in services, subscriptions
Apple's U.S. customers installed 45 new iPhone apps in 2017, a growth of 10 percent over last year, while Services revenue from In-App Purchases and Subscriptions expanded by 23 percent--driven by games, music and video streaming and dating services. And overall, Apple's U.S. App Store customers drove significantly higher revenue per user ($58) than Google Play ($38).
The App Store grew significantly in 2017, thanks in part to better merchandizing
From "The Apple App Store graveyard" to "Forget Apps, Now The Bots Take Over," a series of articles sought to explain how Apple's mobile software platform was doomed and that the next big thing in mobile software was somehow coming in the form of chatbots or AI voice services.
Recent U.S. data from Sensor Tower shows that outlook was indeed wrong. The company noted that customers installed an average of 45 new iPhone apps in 2017, about 4 more than they had in 2016. One contributor to this growth is likely Apple's efforts to highlight content in the App Store and make it easier to search for and discover titles, with high-quality, magazine-like merchandising.
And beyond downloads, users were volunteering to pay for more App Store content as well. Games alone drove about 62 percent of total revenues, or $36 per user, mostly from In-App Purchases. Again, Apple's App Store overhaul specifically calls out games in their own store panel, separate from other apps.
Sensor Tower reported Music streaming separately, with services such as Pandora and Spotify generating nearly as much revenue per user: $4.10. It's not clear if that figure also includes first-party revenues from Apple Music.
"Lifestyle" apps, largely driven by dating services such as Bumble, Grindr and Tinder, drove subscriptions that were more than twice as high as the previous year, reaching revenues of $2.10 per user.
Social media app revenues reached $3.60, up 38 percent, from in-app tipping in services including Periscope, Live.me, YouTube Gaming; VoIP call credits in Skype; and from subscriptions to services including Microsoft's LinkedIn.
Apple has focused on subscription revenues as a growth opportunity in the App Store, and has also focused on its own subscription content, ranging from Apple Music to new efforts to produce original video and news, as AppleInsider reported a month ago.
Randy Nelson, Sensor's head of mobile insights, stated, "we estimate that for each active Android device in the U.S. last year, approximately $38 was spent on Google Play-on and in apps-so about $20 less than iOS.
"That tracks with the disparity in revenue generation we see between the stores outside the per-device level. Android users generally spend less on or in apps, Google Play generated about 60 percent of the App Store's revenue last year in the U.S."
Android users can download apps outside of Google Play, and content vendors can bypass Google to sell subscriptions directly, but both Google and Android enthusiasts note that shopping outside of Google Play is exceptionally dangerous due to the malware and spyware that saturates open software markets. Even Google Play keeps finding active Android exploits in its own distribution.
The App Store grew significantly in 2017, thanks in part to better merchandizing
The report of my death was an exaggeration
It seems like it was just yesterday that prominent bloggers from Quartz, Tech Crunch, The Verge and elsewhere were building a media narrative that mobile apps were dead.From "The Apple App Store graveyard" to "Forget Apps, Now The Bots Take Over," a series of articles sought to explain how Apple's mobile software platform was doomed and that the next big thing in mobile software was somehow coming in the form of chatbots or AI voice services.
Recent U.S. data from Sensor Tower shows that outlook was indeed wrong. The company noted that customers installed an average of 45 new iPhone apps in 2017, about 4 more than they had in 2016. One contributor to this growth is likely Apple's efforts to highlight content in the App Store and make it easier to search for and discover titles, with high-quality, magazine-like merchandising.
And beyond downloads, users were volunteering to pay for more App Store content as well. Games alone drove about 62 percent of total revenues, or $36 per user, mostly from In-App Purchases. Again, Apple's App Store overhaul specifically calls out games in their own store panel, separate from other apps.
Apple eats up subs
Another new area of growth is subscriptions. Video entertainment services including HBO NOW, Hulu and Netflix grew by 57 percent to reach $4.40 in spending per user.Sensor Tower reported Music streaming separately, with services such as Pandora and Spotify generating nearly as much revenue per user: $4.10. It's not clear if that figure also includes first-party revenues from Apple Music.
"Lifestyle" apps, largely driven by dating services such as Bumble, Grindr and Tinder, drove subscriptions that were more than twice as high as the previous year, reaching revenues of $2.10 per user.
Social media app revenues reached $3.60, up 38 percent, from in-app tipping in services including Periscope, Live.me, YouTube Gaming; VoIP call credits in Skype; and from subscriptions to services including Microsoft's LinkedIn.
Apple has focused on subscription revenues as a growth opportunity in the App Store, and has also focused on its own subscription content, ranging from Apple Music to new efforts to produce original video and news, as AppleInsider reported a month ago.
Apple is learning Services faster than Google is learning hardware
While the general tech media has tried to portray Google's hardware initiatives as anything other than the complete failure they have been, they are also missing that Apple is moving into monetizing mobile Services far better than Google, which historically mastered revenue generation from services on the PC platform.Randy Nelson, Sensor's head of mobile insights, stated, "we estimate that for each active Android device in the U.S. last year, approximately $38 was spent on Google Play-on and in apps-so about $20 less than iOS.
"That tracks with the disparity in revenue generation we see between the stores outside the per-device level. Android users generally spend less on or in apps, Google Play generated about 60 percent of the App Store's revenue last year in the U.S."
Android users can download apps outside of Google Play, and content vendors can bypass Google to sell subscriptions directly, but both Google and Android enthusiasts note that shopping outside of Google Play is exceptionally dangerous due to the malware and spyware that saturates open software markets. Even Google Play keeps finding active Android exploits in its own distribution.
Comments
DED, it would be interesting to see an unbiased look at the two different business models. Rather than saying Google fails at being Apple, why not look at what it is actually trying to do. Its goal is to get many devices into hands and make money from advertising in apps rather than clip the ticket on app purchases. The world is better if we have competing business models.
So no, Gools has not just been focused on mobile ads. And it hasn’t even performed well in mobile ads.
Mobile ads pay far less than display ads on PC, and display ads are generally not very valuable anyway. Google’s main revenue source was never generic ad banners but paid placement of advertising next to search results.
In mobile, people do not search Google so much. They go use dedicated apps. And nobody playing a game cares about banner ads. There’s little real value in in app ads.
If we can criticize Apple for failings with Mobile Me, early iCloud and iAd, then why do you think Google needs to be handled like a child after if blew through many billions and laid off thousands of workers in hardware, and is now (the subject of this article) falling behind in services despite having so many more low value accounts tied to its Android platform?
Also considering Film Struck + Criterion Collection for around $8 a month (yearly price). Used to buy Criterion disc for $30 regularly so it looks like a very good deal for me.
Wasn't there a report stating that somthing around 80% of American Teenagers (13-19) have an iPhone????
Take that into consideration then this report is IMHO just clickbait.
What about the rest of the World then? Even Europe with a bigger market size than the USA? Where does that come then? I'll bet that it shows a different story.
My granddaughter said recently that some of her peers (aged 14) look down on her for having an iPhone with parental controls enabled (her father works in IT security for a Bank). Her peers can do anything on their phones including a lot of frankly bad stuff.
A form of not so subtle bullying perhaps?
There is a whole world out there besides the lower 48 states.
Of course they would! You're talking about a billion active devices. That's a HUGE chunk of the mobile user base and well worth the couple of billion Google's paying Apple.
How are your Amazon & Facebook bots doing now?
https://www.nbcnews.com/tech/tech-news/thousands-android-apps-improperly-tracking-kids-data-says-study-n866711
"Android enthusiasts note that shopping outside of Google Play is exceptionally dangerous".
The title would be more correct if it stated this information is limited to U.S. App Store. The linked source article makes this clear:
"U.S. iPhone Users Spent An Average of $58 on Apps in 2017, 23% More Than the Year Before"
The numbers are estimates, not absolute numbers, and although the article states that Google Play doesn't represent the entirety of the Android App store market, no estimate is given for how much the missing part could represent. Without such an estimate, the whole idea is out of whack.
A far better observation could be made if it were based on numbers (even estimates) worldwide.
Last year Android App stores were on track to overtake Apple (not sure if services and subscriptions are included, though):
"However, when factoring in Google Play and third-party Android stores combined, consumer spend should overtake iOS for the first time ever in 2017"
https://www.appannie.com/en/insights/market-data/app-annie-forecast-2017-mobile-app-store-revenue-exceed-139-billion-2021/
It would be more interesting to see how that eventually played out.
Safari isn’t what’s meant by “app ads”. Safari is probably the last place google can hope to generate significant revenue in mobile...ads in apps just aren’t as valuable as ads on desktop browsers. And since mobile is app-dominant, that’s a problem for google.
#1 Hardware
#2 Services, aka, taking a cut on stuff (app sales, music sales, etc)
#3 Metadata
Google doesn't have #1 (hardware) in a meaningful way, their #2 (services) is search, and they're in a web-tracker/cookie war for #3 (metadata) with facebook, and all the other trackers.
Metadata is becoming more valuable than search or services-related data because of a) privacy laws like the EU's, but also because b) metadata is typically not considered to be about the person (eg, in the US, law enforcement doesn't need a search warrant to collect "pin registry" info like every phone number you dial, the IPs/websites you visit, certain info shared with a cell tower like your phone's location, etc). Apple can block web trackers - and doesn't need its own web trackers - because the hardware is the tracker. The data doesn't need to be personally linked to a particular device or individual - it's better for obeying privacy laws and avoiding corporate liability if it doesn't - because the metadata can be aggregated (literally, everything "a device" (not a person) does and goes to, merged with other devices on a shared device ID) into an impersonal (not personally identifiable, nudgenudgewinkwink) profile that is then marketable to sellers (not selling personal data, selling access to groups of metadata regarding devices... which are really individual people if you do any significant re-identifying legwork but laws are dumb and that's how the laws currently work in the USA.
EU is much more restrictive with their new privacy law, but there still is a "this isn't personal info, it's 'just' metadata" line where it is possible to make lots of $$$ without all the compliance headaches. The rest of the world is the wild west; no laws or arbitrarily enforced ones, on privacy. Google will always (always?) have search-ad revenue, but without a deep well of metadata it's little more than clickable banners shot into the dark. Long term that's problematic for Google, they know it, and they're trying to use hardware and trackers to address the issue. Facebook is, too. etc. And Apple's trying to block web trackers because it's in their interest to do so. And here we are.
Quote "Mobile ads pay far less than display ads on PC, and display ads are generally not very valuable anyway. Google’s main revenue source was never generic ad banners but paid placement of advertising next to search results."
This is why Google pays Apple a bundle to be the default search on iOS. Which you failed to quote. The money they are making the most from is PAID PLACEMENT of Advertising next to search results!!!! For Example, go to Google Search and enter "Apple Watch". What do you get? First thing I get is a Shop for Apple Watch section showing me the Watch in a number of stores and the prices. Followed by a couple more PAID Links that show (AD in a box) one of them is Apple. So it seems Apple is also paying Google to be the top search result when someone does a Apple type search.
This is the main way Google makes most of their money. You need to scroll past that crap to see the results of what you really want. Myself, I switched my default to DuckDuckGo as you get much less of that crap.
No value in in-app ads? Youtube? Maps? Gmail? Chrome? Waze? You know, five of the most popular apps on the iPhone. This is where Google is making tens of billions of dollars.