THE APP LANDSCAPE

TODAY

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THE APP LANDSCAPE TODAY

1.1 Introduction
The market for consumer applications has evolved dramatically over the
past 6 years. A storefront-oriented ecosystem which was effectively
created in mid-2008 by Apples App Store rapidly branched out across
other operating systems, killing off the operator portals. Meanwhile, the
traditional payment mechanism, PPD (Pay Per Download) has been
eclipsed by a freemium model which enables apps to generate ongoing
revenue streams without reinstallation. Finally, the most popular apps are
no longer limited to the Games sector: OTT (Over The Top) messaging
and voice apps regularly see downloads in the 10s (in some cases 100s)
of millions, while smartphones are now a key channel for activities such
as banking, shopping, social networking and media consumption, all
facilitated and fuelled by connected applications.

1.2 Key Trends in Mobile Applications

1.2.1 Freemium Predominates
Barely 1% of applications are now paid for at the point of download. The
vast majority are monetised either through advertising or through
consumers either subscribing to content post download (eg the music
service Spotify) or through a series of one-off purchases of premium
content (avatars, additional game items). All these purchases can now
take place within the original application.
The upshot of this business model transformation is that just 12% of all
app revenues occur through pay per download, with most app providers

recognising that the option of ongoing revenues is preferable to a model

whereby once an app has been downloaded, it cannot be monetised in
the future.
Some app categories such as Navigation still primarily utilise the PPD
approach, charging a substantial fee at point of download to recoup the
product costs. For example, the Tom Tom series of regional maps retails
at $50-70 per application. Nevertheless, even in this sector, the addition
of features such as real-time traffic and parking information offers an
opportunity to generate additional revenues post-download.

1.2.2 The Pre-eminence of China

Over the past 18 months, the effective duopoly that Apple and Google
held over the global app distribution market has been dramatically
disrupted, at least in terms of download volumes. This disruption stems
directly from the mass adoption of apps in a single market China and
from the unique dynamics of that market which severely limit the
opportunities for Google.
China itself accounted for 59% of global app downloads in 2014,
bolstered by burgeoning smartphone/tablet adoption and a consumer
enthusiasm for apps unmatched elsewhere.
In China, consumers now download, on average, nearly 90 apps per
mobile handset or tablet per annum, against a global average of 28. On
Chinese smartphones, the average is in excess of 200 downloads per
annum. The bulk of these downloads, as elsewhere, occur on Android
devices. But whereas in most markets, Googles Play store has become
the benificiary of the consumer desire for apps, in China access to Play is

THE APP LANDSCAPE TODAY

severely restricted by the GFoC (Great Firewall of China), allowing local

players to gain traction on Android handsets.

Figure 1.1: App Downloads, By Leading Storefronts, 2014

(184.9bn)

The net result of these factors is the Chinese app stores now comprise 5
of the 7 leading global storefronts. In 2014, Baidu overhauled the App
Store to become the second largest distributor of apps worldwide, while
Qihoo, Tencent, Wandoujia and Xiaomis Mi store all achieved more than
8 billion downloads (and in Qihoos case, more than 20 billion).
An array of Productivity apps have also proved extremely popular in
China, most notably VPN apps such as SuperVPN Free VPN Client (with
more than 5 million downloads) as consumers seek to circumvent the
GFoC and access blocked websites.
The surge of activity in China means that no other market now accounts
for even 10% of app downloads. In 2014, the other largest markets by
app downloads were the US (8%), South Korea (2%), Germany (2%) and
the UK (2%).

1.2.3 Communications Becomes App Driven

One corollary of the transition to an app-led mobile environment has been
an erosion of traditional network revenues by traffic migration to OTT
VoIP and IM (instant messaging) apps. Worse, these apps are by
definition chatty and generate cost, but not revenue, for the network via
the scale of signalling traffic. At the same time, consumer behaviour has
shifted so that conversations which would formerly have been conducted
via voice calls or text are now occurring through social media posts and
comments on those posts.

Source: Juniper Research

Globally, the users of key OTT apps now dwarf those of most mobile
operators: WhatsApp has more than 700 million monthly users, while
Facebook Messenger has more than 500 million and Viber 236 million.
The sheer scale of activity can be illustrated by the fact that the number

THE APP LANDSCAPE TODAY

of messages sent per day on WhatsApp (30 billion) now exceeds all P2P
(person-to-person) SMS sent worldwide in the same time.

Figure 1.2: App Downloads, 2015, by App Category (235.8bn

downloads)

Whereas network operators had only achieved minimal revenues through

content sold on their portals, the transition to app-enabled
communications becomes an assault on their core revenues.
The impact in the Netherlands, where WhatsApp rapidly gained traction,
has been particularly severe, with KPN experiencing a 60% decline in
average SMS usage levels between 2011 and 2013. Similar declines
have also been reported in South Korea following the widespread
adoption of KakaoTalk in that market.
Meanwhile, although OTT VoIP substitution has yet to impact on MNOs
to the extent that IM substitution has, it clearly represents a significant
challenge for the future.

1.3 Market Forecasts

We anticipate that the number of apps downloaded this year will increase
by nearly 28%, to more than 235 billion. While Games will continue to
account for the lions share of downloads, sectors such as Lifestyle,
Productivity and Social Communications will also experience strong
growth, with all three sectors seeing more than 30 billion downloads
worldwide during 2015.

Source: Juniper Research

Although Games is the most mature app sector, we believe that there is
significant scope for growth in both developed and developing markets:
developed markets are seeing strong migration from handheld game
consoles, while social gaming growth is likely to continue with an

THE APP LANDSCAPE TODAY

increasing proportion of end-users playing games accessed via social

networks.
Meanwhile, the highest grossing games are expected to remain FTP
(Free To Play) gambling games with in-app credit purchase, such as
Slotomania and Big Fish Casino. These games perform particularly
strongly in markets where PTP (Pay To Play) gambling is restricted.
Although Multimedia apps are expected to rank only 5th in terms in terms
of apps downloads, they will represent the second-highest grossing
category. Adoption is likely to be further fuelled as network operators
bundle multimedia applications with customer subscriptions. Furthermore,
broadcasters are now offering distinct and bolt-on mobile packages, a
trend which will gain further impetus as customers migrate to larger
screen phablet devices.

THE APP LANDSCAPE TODAY

Order the Full Research

Apps & App Stores Market Trends & Forecasts 2015-2019

This industry leading Excel and PowerPoint guide to mobile apps and app
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Forecasts split by 8 app categories (Games, Multimedia, Lifestyle,

Productivity, eReaders, Social Communications, Healthcare and
Finance), 3 device types (Smartphones, Featurephones and Tablets)
and 2 monetisation models (Pay Per Download and In-App Purchase).

The PowerPoint Slide Set

Assessment of app prospects by category.

Key Features

Forecast methodology.

Key forecast commentaries.

Comprehensive market projections for the size and growth of the

mobile applications market, split by 8 app categories, 3 device types, 2
monetisation models, 12 key countries and 8 key regions.
Overview of App Store marketplace, including market share by
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Detailed forecast commentaries, including assessment of regional

status and prospects by app category.

Forecast model methodology schematic.

The Interactive Forecast Excel (IFxl)

Over 78,000 data points and 571 tables.

10 What-if-analyses.

Publications Details
Publication date: February 2015
Author: Windsor Holden
Contact Jon King, Business Development Manager, for more information:
Jon.King@juniperresearch.com
Juniper Research Ltd, Church Cottage House, Church Square,
Basingstoke, Hampshire RG21 7QW UK
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Country level data for Canada, China, Denmark, Germany, Norway,

Portugal, Spain, Sweden, Japan, South Korea, UK and US.