App spending to soar $270 billion 2025
By Felicia Nwosu
Following the large number of users expanding the landscape of software applications and its huge penetration across the global markets, a report by a research platform known as Sensor Tower has forecast that the global mobile market app spending will reach $270 billion in 2025.
According to Sensor Tower, global consumer spending on in-app purchases and subscriptions across Apple’s App Store and Google Play will reach $270 billion annually by 2025, nearly 2.5 times what consumers spent in 2020 as COVID-19 accelerated mobile trends.
Again, the market forecast pointed out that the long-lasting effects of the pandemic on consumer habits led to a surge in both first-time installs and consumer spending. It therefore projected that, over the next five years, the ecosystem will continue its strong performance and experience enormous growth across the globe.
The analysis of the data noted that mobile apps during 2020, climbed 30 percent year-over-year to $111 billion. Explaining further, the report stated that Y/Y growth in spending will return to pre-pandemic levels over the next five years, while gross revenue on both app stores will continue to climb each year with a 19.5 percent compound annual growth rate (CAGR) to reach $270 billion in 2025.
The research professional body, which reaffirmed that the mobile ecosystem will continue to thrive, said the App Store will see a CAGR of 21 percent through 2025, reaching $185 billion annually. In its futuristic manner, it stated that consumer spending on Google Play is projected to experience a 17 percent CAGR, hitting $85 billion annually within the next five years.
It also observed that consumer spending in the United States will grow at a slightly slower pace than the global trend, climbing to $74 billion in 2025 at a CAGR of 17.7 percent, and in the same growth rate, it maintained that the U.S. App Store will experience a CAGR of 19.6 percent and Google Play will climb 14 percent to $51 billion and $23 billion, respectively.
Sensor Tower also showed that first-time downloads will grow consistently,having achieved its highest growth since at least in 2020, surging 24 percent Y/Y to 143 billion.
On the other hand, it indicated that though the pace of installs will slow as markets begin recovering from the pandemic, that both the App Store and Google Play will continue experiencing stable Y/Y growth.
With an estimation that global app installs across both marketplaces will see 10 percent CAGR, reaching 230 billion in 2025 as Google Play will surpass the combined CAGR, growing 11.5 percent to 187 billion, while the App Store will experience a CAGR of 4.6 percent and reach 43 billion.
The estimates maintained that although installs on Google Play will grow at a greater CAGR globally, that in the U.S., the inverse is true, with the App Store experiencing a 5.2 percent CAGR to reach 10.6 billion downloads in 2025 while Google Play will grow 1.9 percent to 6.3 billion. The two marketplaces combined will see a 3.8 percent CAGR to reach a total of 16.9 billion in 2025.
Interestingly, it further elaborated that App Store spending in non-game Apps will overtake mobile games. From this, there is an indication that consumers spent twice as much on mobile games than on non-game apps in 2020 on Apple’s App Store.
It however said that will change in 2024 with a prediction that spending in non-game apps will reach $86 billion compared to $73 billion in games, while by 2025, non-game apps will widen their lead even more, reaching $107 billion while mobile games will reach $78 billion.
It specified that these factors are driven by the remarkable breakthroughs recorded by the subscription model, as growth in App Store revenue in non-game apps over the last five years has outpaced that in mobile games. It attested that consumer spending in non-game apps increased 4.7 times between 2016 and 2020, while it doubled in mobile games.
Major continents that will be leaders in spending include four European countries as this will exceed $1 billion in consumer spending in 2020, a number that will nearly triple by 2025. Over the next five years, 11 European countries will pass that milestone and the region will collectively reach $42 billion.
Also it stated that the United Kingdom will continue to lead the region in spending on the App Store and Google Play, climbing 181 percent from $2.9 billion in 2020 to $8.1 billion in 2025. Among the top 10 European countries by consumer spending, the Netherlands will see the most growth, surging 210 percent from $495 million to $1.5 billion.
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