A vast global download market
appScatter’s solution is relevant for any company that needs to publish apps. This can range from companies where the app is their primary source of income (for instance games developers, entertainment services), or companies where apps are provided to customers to support their wider business case (eg retail companies, restaurants, financial services groups, etc).
The market for mobile goods and services is already a vast market and is forecast to continue to grow rapidly. App downloads are ultimately driven by increased smartphone usage, itself a function of continued improvements in connectivity as operators move towards universal 4G coverage, the availability of affordable handsets (particularly in the fast-growing developing markets), and improvements in the quality and range of services on offer as technologies improve (eg HTML5, Google’s Accelerated Mobile Pages). Furthermore, greater consumer acceptance of mobile payments and the deregulation of the mobile payments markets, particularly carrier billing, is opening up the market to a wider range of digital goods. Almost half the world’s population has internet access (3.4bn, eMarketer) with approximately three-quarters using a mobile connection, of which almost half is via a smartphone (47.4%), and penetration is forecast to continue to expand at a steady rate. In addition, tablets, wearables and connected TVs are all gaining in popularity.
Analytics group App Annie estimates that in 2016 consumer spend on apps was $62bn and forecasts this to increase to $139bn by 2021. The vast majority relates to games (81% of consumer spend via stores in 2016), although in-app subscription revenues for non-gaming services are forecast to grow even more quickly over the next five years (25% CAGR). Many non-game apps also monetise through advertising or m-commerce, both of which account for a significant share of industry revenues. In 2016, global mobile advertising revenues surpassed desktop to reach $99bn with 27% growth forecast in FY17 (eMarketer) and m-commerce is now almost a trillion dollar market (Euromonitor, 2016).
However, these statistics only relate to the monetisation of apps. In today’s app economy, many businesses distribute apps not for direct monetisation reasons, but to widen their reach or to improve their service offerings. According to Gartner, there will be 269bn app downloads in 2017, up from 102bn in 2013, and developers are adding approximately 400k new apps a year to the two largest app stores, Google Play and the Apple App Store (Statista). AppScatter estimates that there are c 10m apps available to download in app stores, but over 1bn unique URLs from over 6m active publishers; it is already tracking c 90% of the entire market.
Exhibit 4: Number of apps available – Apple App Store
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Exhibit 5: Number of apps available – Google Play
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Exhibit 4: Number of apps available – Apple App Store
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Exhibit 5: Number of apps available – Google Play
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Relevance of ‘other’ app stores
The Apple App Store and Google Play are clear market leaders in terms of revenues and downloads. Respectively they have 2.2m and 2.8m apps available (Statista, Exhibits 4 and 5) and, in the US and the UK they account for 85% and 69% of all downloads. However, given the scale of the market, the number of downloads from the ‘other’ category (of c 300 stores) remains significant, particularly outside the US and Europe. China is the world’s largest app market and because most of Google’s services are banned, other platforms account for approximately 75% of all downloads in China (Exhibit 6).
appScatter estimates there are over 300 legitimate app stores worldwide. The lack of independent analytics outside the App Store and Google Play makes it difficult to provide an accurate picture regarding how relevant the other app stores are to developers. However, appScatter’s research, as well as data that we have gathered from other app stores, suggests that as the two giants become over crowded, it is the ‘other’ category that is gaining in relevance. We note below various categories of stores:
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Telecoms operators: MTN Play, TIM Store, Vodafone, Airtel Sri Lanka, AT&T App Centre, Turkcell T-Market.
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Device platforms: iOS (2.2m apps – Statistica) and Android (2.8m apps – Statistica), Windows (670k – Microsoft by Numbers) and Symbian.
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Independent stores: Getjar (0.8m – Business of Apps), Bemobi (0.3m – Wikipedia), Mobango (0.1m apps – Business of Apps 2015), Amazon (0.6m apps – Statista), Wandoujia (200m users – Business of Apps 2015), Tencent (Myapp – 250m apps downloaded in March 2017), Baidu, IMobile (0.8m apps), Aptoid (0.23m apps – March 2017, appScatter white paper), Yandex (0.1m apps).
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Manufacturer specific: Samsung Apps, LG Smart World, CISCO app HQ, Lenovo.
The search driven nature of major app stores, which have millions of apps on offer, means that, for all but the leading apps, being discovered can be difficult and expensive.
Alternative stores can improve app discovery as they are less crowded, often drive higher conversions for niche or specialist apps, may have higher daily users in specific geographies (particularly in Asia) and often have less restrictive in-app advertising policies. For instance, a 2013 statistic from the One Platform Foundation suggests that the chances of an app being featured increased by 20-fold on an alternative app store. Similarly, according to the 2013 report ‘Apponomics’, data provider Xyo shows that 75% of apps in its search engine get 90% of the downloads, whereas for the major app stores it is more likely to be 10% of apps driving 90% of downloads.
Exhibit 6: App store market share by geography
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Exhibit 7: Revenues from app stores by market – China larger than the US
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Source: App Annie (App Annie’s Market Forecast 2016-2021)
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Exhibit 8: Downloads by store
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Exhibit 9: User data from selected alternative app stores
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Source: App Annie (App Annie’s Market Forecast 2016-2021). Note: App Annie does not track all ‘other Android’ stores; it is not clear how many stores are included in this analysis.
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Exhibit 6: App store market share by geography
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Exhibit 8: Downloads by store
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Source: App Annie (App Annie’s Market Forecast 2016-2021). Note: App Annie does not track all ‘other Android’ stores; it is not clear how many stores are included in this analysis.
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Exhibit 7: Revenues from app stores by market – China larger than the US
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Source: App Annie (App Annie’s Market Forecast 2016-2021)
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Exhibit 9: User data from selected alternative app stores
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Issues faced by app developers and publishers
Complex and fragmented app store process
By limiting app distribution to the largest stores, app owners are restricting their reach, but the challenges of managing the wider publication of an app are often seen as too complicated to justify the effort.
We outline what we consider to be the key stages in an app’s journey in Exhibit 10.
Exhibit 10: The complex journey of an app
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Source: Edison Investment Research. Note: appScatter’s services in bold.
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App store registration and distribution
For every ‘unique’ app published, there may be tens or hundreds of different versions (instances) created in order to be compatible with different programming languages, operating systems, as well as variations for different geographies (eg for language or compliance reasons) or for adherence to differing app store policies. Publishers will also need to ensure that local legal requirements are adhered to on a store by store basis (such as tax rules).
For instance, a unique app that is published across 10 markets on five different app stores could have 50 versions. For enterprises that publish more than a few apps per year, this can mean managing hundreds of versions of their apps. Developers/publishers will need to register themselves with each app store. Individual approval of each version of an app is required by app stores, a process that can take up to a week. The task of distributing to app stores is generally managed by internal teams and can become resource heavy. Consequently, they focus on stores with the largest market shares, typically just Google Play and the Apple App Store.
Once published, companies need to monitor these apps, not only in terms of performance, but also compliance to a specific company’s policies or branding.
Existing solutions that enable app owners to publish across a number of stores tend to limit services to Android environments where there are many alternative stores to Google Play. For instance, CodeNgo enables distribution to approximately 30 Android stores, and Digital Turbine distributes to eight stores. An open-source initiative was started in 2013 by Opera, SlideME and CodeNgo called The One Platform Foundation for the Android ecosystem although this does not appear to have had much impact. None of these solutions, however, provide feedback on an app’s performance, ranking data or market intelligence.
App ranking and market intelligence
A further bottleneck relates to app store ranking data and market intelligence, which again tends to be restricted to Apple’s App Store and Google Play.
App Annie’s much cited consumer index shows which apps are most frequently downloaded from App Store and Google Play. Within these stores, data is collected on apps that run the App Annie API, and hence it excludes proprietary apps made by Apple, and some other larger apps such as YouTube. Nevertheless, 90% of the top 100 global app publishers use App Annie, equating to 1,000,000 apps, which provides a deep pool of data. Due to its third-party integrations, App Annie can also offer a range of more sophisticated app analytics (in-app analytics, return on marketing investment), as well as app store optimisation (ASO) tools. However, unlike appScatter, App Annie is not involved in the distribution of an app.
Other analytics players include Yahoo’s free mobile application analytics tool for Google Play and the Apple App Store: Flurry, which is used by 170k developers across 500k+ applications. Flurry offers detailed in-app analytics, although no ranking data as far as we can tell. Other notable offerings include Applyzer, which provides ranking data across iOS, Mac apps, Apple TV and Google Play; Google Analytics (Google Play only); Sensor Tower; Apptopia; Appcodes; MetricsCat; appfigures; AppsFlyer; delta DNA; AppMonsta; and Digital Turbine.
In summary, there does not appear to be any competing solution available that supports both the distribution into and the ranking of apps across as wide a network of stores as appScatter’s.
Through the planned marketplace, appScatter’s licensees will be able to integrate a wide range of applications, which would enable them to consolidate multiple tools into one dashboard.