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May 2, 2018

App Downloads to Hit 258 Billion by 2022 – Subscriptions Increasingly Driving Revenue

Spending on (and via) apps to rise - but are UK businesses being left behind?

By CBR Staff Writer

Global demand for mobile apps shows no sign of slowing; with annual app downloads anticipated to hit a staggering 258 billion by 2022, according to research out today from app market data specialists App Annie.

The company expects global consumer spending on apps (currently dominated by paid-for games) to grow by 92 percent to £114 billion, as mobile captures increased share of wallet; with the average spend per device reaching $25.65 by 2022.

“Apps outside of games will capture an increasing share of consumer spend, with subscription revenue contributing to this growth, with industries such as dating, music and video streaming heavily utilising this model on mobile,” analysts at App Annie’s said.

appsMonopoly Warnings

The report comes a week after consultancy firm Virtusa warned the “explosive growth” of Asian tech giants Baidu, Alibaba and Tencent – as well as continued dominance of US market leaders Amazon, Google and Facebook – meant that by 2025, 80 percent of all digital services will be provided by a handful of tech monopolies.

Virtusa warned that companies delivering services are lagging behind in the digital economy, compared to firms in China (where App Annie sees app-powered consumer spending to surge 107 percent to $62.4 billion in 2022).

“Customers – especially millennials – don’t care who fulfils their order or delivers them a service. They don’t need to have a dedicated banking or telco provider, they’re perfectly happy to bank via a social media app if it works intuitively,” said Raj Rajgopal, President of Virtusa’s Digital Strategy Group.

He added: “Firms are waking up to a world where the economy is being built around platforms, where only the fulfillment of a product or service will matter, not who fulfils it – a realisation that should serve as a wake up to all specialist businesses in the UK,” he continued.

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German Consumers Shake off Inhibitions

The UK is expected to see its consumer spend rise to $2.7 billion in 2022, as app downloads and use rise steadily, but German use of apps to for financial transactions is set to prove a major European trend, the report suggests.

Bertrand Salord, VP of Marketing at App Annie, told Computer Business Review this will be driven by cultural changes in the country.

“The European Central Bank estimated that physical cash was still involved in approximately 80 percent of point of sale transactions in Germany. As you can imagine this cultural preference for cash has slowed the adoption of digital payments,” Salord said. “However, we’ve seen signs that this behaviour will change over the coming years. German consumers are increasingly willing to spend in apps. For example, the ARPU of the highest grossing game in March 2018 was nearly 3X the ARPU seen by the highest grossing game in March 2017.’’

The report also analysed annual spend per device; finding the average amount spent per device on mobile applications was $20.94 in 2017, which is forecast to rise to $25.65 in 2022. However Japans spend per device is expected to see rapid growth by 2022 and is expected to exceed $140.00.

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