What the Future Holds For the Mobile App Market?

Mobile App Development

What the Future Holds For the Mobile App Market?

It is estimated that by the end of 2017, the mobile app development industry would be worth $77 billion and expected to touch the $100 billion mark by 2020. A staggering 270 billion apps would be downloaded by the end of the year which is more than five times the figure in 2013. Mobile apps have long surpassed other fields of information, communication, and technology since the last decade. There is a growing demand for apps that entertain, solve problems and most importantly let users live an easy and smarter life. Given the demand for apps that do everything from tracking your heart rate to letting you manage investments, there has also been an exponential growth in the demand for developers.

As the above stats suggest there is a lot of room for growth in the app development world in terms of revenue. In fact, it is opening up new opportunities every now and then for the app developers. In fact, more than 50% of the people in this world are yet to own a smartphone and hence the revolution has just begun. Businesses are increasingly looking at mobile apps as means to transform their business and take it to a whole new world. This is a stark contrast to the market scene a few years ago when businesses saw apps as a fancy item that added to their branding quotient.

Giants Dominate
As per the latest market share among mobile operating systems released by IDC; Android holds a lion’s share of the market.  It commands 86.8% of the market followed by Apple iOS which has 12.5% of smartphone and tablet users under its fold. Together these companies hold a staggering 93.9% of the market with OS like Windows and others relegated to oblivion. Each of their app stores has more than two million apps at the present moment. While Android may dominate in terms of numbers it iOS developers who have been able to better monetize their efforts. This isn’t surprising given the distinction in the purchasing power of an average Android and iOS user.

Who Is Leading Mobile App Development?
So what are the users downloading? What categories of apps are trending in the market? Let’s throw some light on that as it would give you a fair idea about the emerging trends in this industry.

  • You may be surprised to know that gaming apps no longer account for a large share of app usage as non-gaming apps have taken the lead. News and infotainment apps have seen over 300% growth in downloads and usage in the last three year.
  • Customization apps which include avatars, lock screens and wallpapers have seen an exponential growth in the last few years.
    Security apps are a hot favorite among most users.
  • There has been an increased demand for productivity tools as these are being promoted by small and large businesses alike.
  • Leisure apps that cater to travel, lifestyle and sports needs of the users have also grown substantially in the last few years.

How to Monetize Your App?
This is the first thing that crosses the mind of any app developer or business when they are releasing their app. It is estimated that more than 50% of apps see revenues less than $1000 which hardly takes care of the effort and expenses that go into developing these apps. While putting a price tag on app was the only source of revenue in the initial days, app developers have come up with innovative ways to monetize their apps. Here, we take a look at some of the most popular models for app monetization –

  • Direct Sale–As the name suggests, these apps directly charge a user who wishes to download and install them. Here, app developers release screenshots, descriptions, and videos of the app to lure the users. This revenue model is extremely challenging as you will have to show the incentives beforehand to the users. Also with free alternatives readily available, you must offer incentives to your users to ask for an upfront payment from them. However, apps like VIP Black and Agro are priced at $999.99 per download and have a sizable fan following.
  • Freemium–This is one model that has benefitted several mobile app developers. Like a trial version of software, the free version of the app is offered to the users with limited features and functionalities. The user is offered a premium version of the app with more features. If you choose to opt for this model, you will have to work hard towards increasing the number of downloads as average conversion rate from free to premium version is abysmally low and stands between 1 and 3%. Clash of Clans is a great example of this model.
  • Subscription – Apps like WhatsApp have popularized the subscription model where users need to pay a monthly or yearly subscription plan for the app. It is often marketed using the freemium model where users are offered free access to the app for a fixed period of time and have to subscribe in order to continue the usage once their trial period is over. While the average conversion in subscription apps is slightly higher than the freemium model, you need to aim at a large number of downloads so that you can make a decent revenue from your app.
  • In-App Monetization – This is one of the popular means of monetization that is used by app developers. This model is mostly popular in gaming apps where users are charged for additional access to games, lives and booster features. Popular games like Candy Crush and Contract Killer Zombies have creatively used this in-app monetization to increase their revenue. This model is often termed as ‘micro-transaction’ as users need to pay small sums for purchasing virtual products within the app.
  • Crowdfunding – This model has been explored in the world of technology in many ways. From making YouTube videos to software, people with smart ideas often turn to ordinary folks for raising money. In the app development industry, this is a new concept where app developers present their idea to a large community and ask for a small contribution that goes into funding the development and regular updates of their app. If you are able to show the incentives to the community, you won’t have trouble raising the necessary money for your app. It is a relatively young monetization model. There are a number of mobile app crowd-sourcing platforms such as Shadows, which were developed using this model.

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  • Sponsorship – While this model is still in its infancy, it is showing the possibilities of a great revenue model for the app developers. Here, while the apps are used as a marketing platform where their end users get paid for marketing different products and services, a part of the revenue is also used by the app.

Earning Through Advertising
Apart from these models, another model of app monetization that has gained immense popularity is through advertising. The likes of Google, Twitter, and Alibaba account for the remaining share of the pie with very few apps being able to use their platforms as a lucrative marketing channel for other apps. The good news is that in the last few years, there has been some reversal in this trend and niche apps, mostly in the gaming industry, have gained a sizable market share in app advertisement. In fact, the biggest game houses that account for bulk revenues in the industry are turning to relatively lesser known apps as a preferred advertisement channel in order to both reduce the cost as well as increase their visibility in unchartered territories.

The Growth Is Here To Stay
Each of the revenue models discussed above has their pros and when best applied with the inherent characteristics of the apps, the aspirations of their users can help intensive app development. Often hybrid monetization models that combine two revenue models pay huge dividends to the app creators. With devices becoming smarter and loaded with cutting-edge hardware that was almost unimaginable a decade back, app developers are also looking towards new revenue models where they would be able to monetize the benefits that are being offered to the users.

To sum up, the exponential growth in mobile app development is here to stay with an increasing penetration of Smartphone and tablets in the developing countries which would lead the next phase of growth in this industry. With governments and businesses in these countries seeing apps as an effective way of governance and reaching out to people, quality apps that engage the users won’t find it tough to monetize their offerings.  While new revenue models may change in the future as developers come up with newer ways of minting money through their app, the growth in revenue is a foregone conclusion.

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