Apple App Store ecosystem generated big bucks last year

Apple App Store ecosystem generated big bucks last year
Apple reported today that its app storefront supported $519 billion in billings and sales in 2019. A study was conducted by independent economists working for Analysis Group who calculated that since the App Store opened with 500 apps in 2008, Apple has paid developers more than $155 billion. A quarter of those payments were made last year. Developers share with Apple payments for paid apps, digital content or in-app purchases made by users through Apple's in-app payment system.

Coronavirus has a negative effect on App Store billings

The economists that were studying the amount of money that flows through the iOS app ecosystem are underestimating the amount of money that is collected by Apple. That is because some developers decide to monetize their apps through other methods outside of the App Store. For example, digital goods and services can be sold outside of the App Store for use within apps on Apple devices. An example of that would be downloading the Netflix app from the App Store and going to the Netflix website to pay for a subscription. Another example, one that is very popular these days, involves installing a delivery app like Instacart or Shipt, and paying the delivery firm directly for groceries through its website.

Of the $519 billion in billings and sales that the App Store generated last year, physical goods and services accounted for $413 billion or 80% of total revenue. $61 billion, or 11.8% of revenue, came from Digital Goods and Services; that leaves $45 billion, or 8.7%, which came from in-app ads. Analysis Group says that the world's largest smartphone market, China, was responsible for a leading $246 million or 47% of global App Store billings. That was followed by the $138 billion or 27% that comes from the U.S.

While the report is based on 2019 data, AG says that the coronavirus has had an enormous, positive impact on App Store business. The Analysis Group says that it has seen increased use of educational and business collaboration apps during the pandemic, growth in demand for food and grocery deliveries, and a trend toward ordering food and then driving to the restaurant to pick it up. Other changes include an increasing trend toward mobile gaming and video streaming apps, and the increasing popularity of social apps which are replacing the gap felt by users during periods of social isolation.

The report says, "With widespread social distancing around the globe, more consumers are turning to mobile to make purchases and to stay informed, connected, and entertained. Many companies and their employees have had to adjust to working from home, while universities, schools, and students have switched to remote teaching and learning. During this time, app downloads, usage, billings, and sales have seen an overall surge.

Not all apps have been able to benefit from the pandemic. Apps related to businesses that have closed or have faced strict regulations (such as the hotel business, airlines and restaurants) or those that require face-to-face interaction (like the ride share business) have been seriously impacted. And as the global economy has taken a huge hit, digital advertising also has see a plunge as companies feel less of a need to advertise to a public that is not as liquid as it once was.

Apple CEO Tim Cook, talking about the App Store says, "The App Store is a place where innovators and dreamers can bring their ideas to life, and users can find safe and trusted tools to make their lives better. In a challenging and unsettled time, the App Store provides enduring opportunities for entrepreneurship, health and well-being, education, and job creation, helping people adapt quickly to a changing world. We’re committed to doing even more to support and nurture the global App Store community — from one-developer shops in nearly every country to businesses that employ thousands of workers — as it continues to foster innovation, create jobs, and propel economic growth for the future."

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