A new report from Sensor Tower (via Tech Crunch) that will be released later this week will reveal that the average U.S. Apple iPhone owner spent $79 on paid apps and subscriptions last year. That is up a healthy 36% from the $58 that each iPhone owner spent on apps and subscriptions in 2017. Even before iPhone sales started slowing this year, the company decided to focus on its services unit, aiming to produce $50 billion a year in revenue from the App Store, Apple Music, AppleCare, Apple Pay, iTunes and others. The 36% year-over-year increase in spending was up from the 23% growth seen last year, but lower than the 42% hike seen in 2016.
The report shows that stronger growth was seen with subscription based services such as Netflix. These apps are free to install, but charge a monthly fee for service. Entertainment apps, for example, made up $8 of the average $79 spent by U.S. iPhone users on apps. That was up 82% from the average $4.40 spent by iOS users in 2017.
The category that iPhone users in the states spent the most money on in 2018 was Games. On average, each U.S. owner of an Apple handset spent $44 in 2018 on gaming apps, including in-app purchases. That was up 22% from the $36 spent on average in this category during 2017. Lifestyle and Health and Fitness apps also showed strong growth last year. Spending on the former rose 82%, while revenue collected for the latter was up 75% in 2018.
Apple's services unit is the company's second largest division and generated nearly $11 billion in revenue during Apple's fiscal first quarter. The unit is believed to be the most profitable part of Apple and had a gross margin of 62.8% during the same quarter. A strong performance in this sector is important for Apple, not only because of the struggling iPhone; Goldman Sachs analyst Rod Hall said today that Apple's revenue from Google searches will decline this year.