20 April , 2014
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Apple Inc. (AAPL) Losing Out To Google In Mobile App Market, Freemium Business Model Driving Growth [Report]

 
 

Mobile App market is currently booming, App Store from Apple Inc. (NASDAQ:AAPL) and Play Store from Google Inc. (NASDAQ:GOOG) now offer more than 700,000 apps each. As per Gartner the App market is supposed to rise by 62% to $25 billion in 2013. With new geographies, new categories and new devices still being added. The mobile app industry is still walking on an uncertain road. Companies are still trying to figure out which business models work and which would suit their apps.

A report from Distimo – a free app analytics platform for developers – tries to take a detailed look into the different models and their success in mobile app market. It also lists the major apps, publishers and developments which happen in the mobile app market during 2013.

Highlights:

  • Although Google Play’s revenue share has been growing at Apple’s expense, the Apple App Store is still leading with 63% of market revenue share.
  • Developed world is the biggest revenue contributor to the mobile app market. Top countries being : United States, Japan, and South Korea.
  • South Korea, Japan and China were the countries with the highest growth in 2013 as compared to 2012.
  • Apps using the Freemuim business model – where users are charged for premium services or goods, showed a major growth as compared to the paid app model.
  • The most revenue generating app in 2013 was Supercell’s Clash of Clans.
  • Apple App store didn’t have any of the apps released in 2013 in top 10.Whereas Google Play had 4 of the apps released in 2013 in its top 10 apps.
  • A majority of top publisher in all three app stores are game developers.

Top 10 Countries by Mobile App Revenue

United States was the largest revenue generating country in terms of mobile apps. It was followed by Japan and South Korea. The remaining top 10 app revenue generating countries were: United Kingdom, China, Australia, Germany, Canada, France and Russia.
top 10 countries
When seen from the perspective of operating systems, the revenue for iOS was largest in the United States followed by Japan and United Kingdom. While in the Android world, Japan, South Korea and United states were the leading revenue generating countries.

Market Growth

South Korea showed the highest growth in terms of app revenue generation, the revenue grew by 759% in South Korea. China and Japan were the next two major markets where revenue from apps grew by 200%. On the other hand, the western markets seem to turning stagnant, with all the major economies US, Canada, UK, France and Germany showing growths of around 60-90%.

country-listing

Revenue of Apple App Store and Google Play

Apple App Store is still leading compared to Google play in terms of revenue. But Google Play is catching up with Apple App Store slowly. The aggregated revenue for Apple increased by 12% during the last 6 months of the year, while during the same period Google Play’s revenue increased by 51%.

Revenue Development of the Apple App Store and Google Play

As emerging economies catch up with their counterparts in developed countries, the share of Google Play may increase in mobile app revenue. Also with Windows based mobiles increasing their penetration slowly, the percentage share of Apple App Store would decrease.

Business Models

As part of the this report, the following three business revenue generation models were studied – free apps with in-app purchases or the Freemium model as it is commonly called, paid apps with in-app purchases and paid apps without in-app purchase were studied. The report analysed revenue from top 200 apps on both Apple App Store and Google Play.

Apps using the Freemium model of business are currently taking the pie by generating 92% of the revenue on Apple App Store which is up from 77 % at the start of the year. While on Google Play, apps using these business models were responsible for 98% revenue way up from 89%.

Below graphs clearly show the revenue share of all the three business models. The revenue share of the Freemium model has clearly eclipsed the remaining two models.

Apps Business model Share

Preference towards Paid or Free content also varies in different categories. While Freemium rules in most of the categories, there are a few categories where the paid business model still rules. Below is a graph for the month of November for Apple App Store, for top 10 categories showing the percentage of each business model.

Apps Category Business Model Graph

In games and social networking which are the top two categories, Freemium model is responsible for generating the maximum revenue for both these segments. The paid apps with in-app purchases is a major contributor only for the Navigation Category. While the paid apps are responsible for generating the maximum revenue in Productivity, Education and Navigation.

Top Global Apps

The below list of top apps was created on the basis of the monthly app list from DISTIMO. Below listing lists the top free and paid apps for both the Apple App Store and Google Play.

Top Free Apps Apple App Store

Undoubtedly Candy Crush Saga occupies the number one position in Apple App Store. Candy Crush Saga has been around since October, 2012 and since then has maintained its numero uno position. General Smartphone apps – YouTube, Google Map, and Facebook occupy the next few positions in the chart list. Games like Subway Surfers and Temple Run 2 occupy the remaining position in the chart list.

Top 10 Free Apps -Apple

Top Free Apps Google Play

Facebook Android App occupies the number one position on Google Play store. It is followed by general Smartphone app utilities like WhatsApp, Skype and Twitter. Candy Crush Saga, Subway Surfers and Temple Run 2 occupy the remaining positions on the list.

Top 10 Free Apps -Google

Top Paid Apps

Like I mentioned earlier, Paid Apps business model has been showing a downward trend, with their market share steadily declining. The list below shows the top 10 paid apps for Apple App Store and Google Play store.
Although WhatsApp became free after July 2013 on Apple App Store. It still managed to remain the number one paid app based on the download for the first half of the year. The remaining apps which were in this list were games. Only one Productivity tool – Pages by Apple was listed in this list at number 10.

Top 10 Paid Apps -Apple

In Google Play store, in contrast to the Apple App Store, only a few games were part of this list. Most of the apps which were listed in this list were either Productivity, Tools, Music or Audio apps.

Top 10 Paid Apps -Google

Top Global App Publishers

The list below provides information about the successful publishers and their most successful apps for the year 2013. This list has been compiled on the basis of number of free or paid downloads or total revenue in Apple App Store and Google Play store.

Top 10 Publishers-  Apple

Top 10 Publishers- Apps google

Source: Distimo

 
 
 
 
 
 
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