The app market landscape is changing worldwide and consumer spending will double over the coming four years

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According to the latest, comprehensive Newzoo Global Mobile Market Report, consumer spending on apps is set to reach $44.8bn this year with spend set to almost double to $80.6bn by 2020.

However, it’s the non-gaming sector in apps that stands to see some significant growth with the share of spending from games set to decline from 83% to 72% over the next four years. Social networking which includes dating apps, entertainment and music will be the top three growth drivers in apps.

Global app store revenues

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Source: newzoo.com

The US remains strong when it comes to app market growth, generating $8.8bn in 2015 and a predicted $15.2bn by 2020. That’s a CAGR of 11.5%. However, the rate of growth is larger in Asia at a CAGR of 17.4% during the same period, growing from $19bn to 42.9% by 2020. Much of the region’s increases in app spending can still be attributed to games compared to Western countries.

Asia Pacific app store revenues

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Source: newzoo.com

In particular, China and the US have proven themselves as the largest app markets globally. Japan is coming close due to a higher per person average spend in apps.

Largely due to its enormous size as well as sheer number of smartphone users and connections, China has seen tremendous growth within the app market. But the mobile games market is expected to continue to slow here too.

Whilst the US will see some of the highest year-on-year growth for photography, lifestyle and entertainment apps; Chinese smartphone users are beginning to turn to social, entertainment and book apps.

US versus China in app revenues and categories

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Source: newzoo.com

When it comes to hardware, Apple has emerged as the clear winner. The company’s iPhone and iPad devices now account for 34.8% of all active tablets and smartphones worldwide. Samsung scores second with 23.3%, followed by Chinese manufacturers Huawei, Xiaomi and Lenovo.

Top 10 smartphone/tablet brands globally

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Source: newzoo.com

It will be interesting to see if Apple can sustain this growth given the recent criticism for lack of innovation and the sheer number of strong Chinese competitors that have flooded the market.

When it comes to smartphone usage, 31% of the world population are in possession of a smartphone. Asia Pacific is set to make up half of the world’s smartphone users this year. It also presents some of the strongest potential for growth together with the Middle East and Africa.

Smartphone and online users versus total population

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Source: newzoo.com

Surely, that provides some interesting intel for app marketers in terms of audience targeting. However, understanding a brand’s consumers inside and out is what can make an ad campaign stand out and ultimately lead to greater success and ad engagement.

So who are the current smartphone users and what are their app store behaviours? According to Newzoo US data, the Apple Store has a larger percentage of younger users, whilst Amazon has more consumers above the age of 36. Amazon also has the highest share of male users compared to Apple and Google Play stores.

App store demographics

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Source: newzoo.com

Interestingly, half of Amazon’s app store users tend to live with children, whilst Apple app store users are predominantly without kids. In addition, Amazon emerges as the platform with the most subscriptions to sites such as Spotify and Netflix and indeed gamers tend to spend more money on Amazon than the other two app stores.

Social app usage also highlights differences between age groups. 55% of Snapchat users are below the age of 25, whilst 19% of over 50-year-olds tend to use Facebook.

With the launch of Apple Pay, it’s likely that mobile payment services will see an increase in usage over the next few years. Newzoo found that overall, users are rather positive towards mobile payment methods. Millennials are particularly interested in using mPayments. Newzoo says that is expects mobile to become a leading payment method in the near future.

Preference for using mobile payment methods

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Source: newzoo.com

The research also took an in-depth look at Pokémon Go, which has been touted as one of the most successful mobile games of the year. But is it a short-lived success? No. Despite an initial spike in download volumes during the game’s launch, the game still generates an average 700,000 downloads per day. That’s hardly short-lived. Indeed, current daily revenues are $2m and let’s not forget that Pokémon Go hasn’t even launched in China and South Korea officially yet.

Pokémon Go daily revenues and downloads

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Source: newzoo.com

So what’s so special about this particular game? According to a comparison with Dota 2 and Candy Crush Saga, users are mostly drawn to the fact that Pokémon Go is easy to pick up and play instantly (31%), but users are also drawn to the game’s openness and ability to roam freely (25%). We tend to think it’s the virtual reality aspect that makes it stand out.

Most enjoyed aspects of Pokémon Go

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Source: newzoo.com

The latest Newzoo report marks the official launch of the company’s Newzoo Mobile subscription service that features annual reports and quarter updates to market data.

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