Strategy Analytics: Subscription revenue forecast to grow from 3% to 20% of iOS app revenue by 2021
Oct 30, 2015
Nearly 300B apps will be downloaded on Apple's App Store between 2008 – 2021
Boston, MA - October 29, 2015 – Strategy Analytics’ just published iOS apps forecast predicts the Apple iOS App Store will reach nearly $30B in revenue by 2021. Between 2008 and 2021 Apple will pay out more than $140B to app developers.
While Apple’s App Store continues to generate billions for developers, the companies benefitting continue to change significantly. In 2008 Apple ushered in the rise of app-first companies generating millions from paid downloads. Today nearly 80% of revenue is generated by virtual goods and in-app purchases as game companies – many household names - dominate. Tomorrow global content owners – Netflix, Hulu, Disney, YouTube, Spotify and others will experience exponential revenue growth fueled by in-app subscription sign-ups. In many emerging markets iOS users will have access to these services for the first time through their Apple devices. Netflix recently allowed in-app sign-up for its service and quickly climbed the ranks of the highest grossing entertainment apps in more than 20 countries.
Apple’s continued position as a premium brand, App Store popularity and embedded technology easing in-app payment will contribute to increased sign-ups for subscription services on the iOS platform. New devices like the refreshed Apple TV and Apple Watch will extend app capabilities enhancing the value of subscriptions beyond entertainment. The popularity of the App Store, which will see more than 300B apps downloaded between 2008 and 2021, offers an important channel for companies seeking to reach new users, upsell existing users and extend reach internationally. Already Health & Fitness, News and Productivity apps are finding success with subscription offerings. Apple will also be buoyed by the new Apple TV and Apple Watch which will account for a small percentage of downloads but will be useful in extending the value of subscriptions.
Report Link: iOS Apps Forecast Model
According to Joshua Martin, Chief Evangelist of Apps Research at Strategy Analytics, “The ascent of Netflix to the top of the highest grossing entertainment apps within just days of enabling in-app sign-up is a testament to the power of apps and iOS. Simply by enabling a feature Netflix found a new universe of users. The stickiness of subscription services such as Netflix and its contemporaries will see content owners sit atop the highest grossing entertainment apps and longer term amongst the highest grossing apps overall globally. Other revenue streams remain strong – in-app purchase will still drive billions in revenue each year throughout our forecast – but the growth of subscription and consolidation among key players is a key trend that will drive future growth for the App Store, Apple, and content owners.”