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As more smartphones, tablets and other mobile devices are snapped up by consumers worldwide, the market for mobile applications is expected to grow as well, with annual downloads projected to reach 108 billion by 2017, according to a report from research firm Berg Insight.
The number of mobile application downloads worldwide doubled during 2012 and reached 60.1 billion, up from 29.5 billion in 2011, the report found. Revenue from applications, including direct revenue and in-app ad revenue, totaled approximately $8.4 billion in 2012. Worldwide app revenue is forecast to show a compound annual growth rate (CAGR) of 17 percent to reach $18.6 billion in 2017.
The Apple App Store, Google Play and some of the third-party app stores were mainly responsible for the explosive growth of application downloads in 2012, according to the report. Google’s Android operating system was the leading platform that year, thanks to a bevy of third-party app stores pushing the platform.
“Third-party app stores are especially popular in China and other markets where Google Play hasn’t become the default on-device app store,” Johan Svanberg, Berg Insight senior analyst, said in a statement. “Monetization is, however, particularly challenging in these markets, even though free-to-download strategies, such as in-app advertising and in-app payments, are promising and have been moderately successful.”
With more than 775,000 applications, Apple’s App Store is the clear leader in the monetization of mobile apps and will keep the No. 1 position during the forecast period. Google Play and Windows Phone Store are anticipated to rank second and third, respectively, in 2017.
“Every app can find its own way to success, but common strategies today among many of the top revenue-generating app developers are to publish apps featuring a social layer on more than one platform using free-to-download monetization,” Svanberg stated. “The mobile app market is highly competitive, but the economical upside can be great for the successful publishers. Like almost no other digital product, mobile apps represent a global opportunity with more or less instant worldwide distribution.”
Multiplatform applications and free downloads are two of the main drivers behind the growth of applications, while publishers look to existing social networks to expand their application user base and increase engagement, the report noted. Some of these publishers are even building their own social media platforms to help spur growth or incorporate established players like Facebook, Twitter, Pinterest and others to gain exposure in an increasingly crowded and competitive market.