Google has narrowed the gap with Apple in the amount spent on apps by users of its Android system this year, even though users of Apple’s iPhone and iPad remain the biggest spenders on digital content.
A new report from Distimo, tracking spending on Apple’s App Store and Google Play, also revealed the dramatic extent to which business models for app developers have shifted from upfront payments to in-app purchasing, in part driven by messaging apps in Asia.
According to IDC, Apple’s smartphone market share stood at 13 per cent in the third quarter, down from 14 per cent a year earlier, while Android’s had increased from 75 per cent to 81 per cent over the same period.
By contrast, Distimo found that Apple’s share of app store spending in November remained much higher at 63 per cent, compared with 37 per cent for Google Play.
However, Google’s share has risen from 30 per cent since June, eating into Apple’s lead. Many Android handsets are sold in China, where Google Play is not widely available and third-party app stores are more popular, which also accounts for some of the disparity.
Average daily combined spending on the 200 apps that generate the most revenue on Apple’s App store rose from $15m to $18m over the past year, Distimo estimates, while Google’s equivalent almost quadrupled over the same period, from $3.5m to $12m.
“The Apple App Store is still leading in terms of total revenue,” said Distimo analyst Christel Schoger. “However, during 2013 Google Play’s piece of the pie was consistently increasing month over month.”
A lucrative app store helps to attract developers, who create the software and services that can keep mobile phone buyers loyal to a particular platform.
Google overtook Apple by the volume of apps downloaded this year, analysts say, but Android has taken longer to catch the iPhone in terms of the amount spent on those apps. Apple’s legacy of selling music through iTunes helped it to accrue hundreds of millions of credit card details, enabling its customers to pay for apps much more easily.
Distimo’s report also showed the rapid rise of so-called “freemium” business models, which are particularly popular among game developers.
The portion of revenue from in-app purchases through apps that were initially free to download in the Apple App Store was 53 per cent two years ago. By January this year that had risen to 77 per cent, but by November it reached 92 per cent for freemium services. The dominance of the freemium model is nearly absolute on Google Play, where it accounts for 98 per cent of all spending on Android apps.
The move from paid to freemium apps has been accelerated by the growth of Asian customers. Spending in South Korea, China and Japan increased several times over the course of 2013. People in the US, Japan and South Korea are the biggest spenders on apps, Distimo found, followed by the UK for Apple customers and Germany for Android owners.
Distimo found that all 10 of the top-grossing apps on Apple’s App Store were games, while also making up most of those on Google Play. Supercell, the Scandinavian maker of Clash of Clans, and King, creator of Candy Crush Saga, were the games companies that made most money on Apple’s app store, followed by the more established console games publisher Electronic Arts.
On Google Play, chat app Line generated the most revenues, thanks to a variety of games that use its platform and sales of digital “stickers” to its users, many of whom are in Japan and South Korea. KakaoTalk, a local rival to Line, has also become a popular platform for games developers, something analysts say could present a nascent threat to Facebook, which has become the dominant site for social gaming in the US and Europe.
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