How Global Mobile App Development is Evolving – Monetization & Challenges

While the APAC region is experiencing a slowdown on the backs of China’s decelerating economy, a growing consumer base with smartphone enabled devices is giving the region a much needed e-commerce boost. To gain a better understanding of the current global mobile app ecosystem and where monetization is heading, we should take a look at InMobi’s recent survey of app developers.

The survey takes a look at platforms, revenue, downloads, monetization, and challenges. A total of 1000 developers participated in the survey in which 47% were from the APAC region, 28% from North America, 14% from Europe, and 11% unknown.  The overall profile of the developers that participated came from various segments, gender, creed, color and race. However, a close look at the broad trend indicated that the world of developers is still predominantly male dominated with women accounting for just 6% of the total developers who participated.  The average age of most developers was between 31-35 years.  While APAC region saw the broadest band in terms of age of developers between 19-64 years.  Just 8% of the developers were over the age of 65 globally.

Not only is the age profile of the app developers quite young, but most are also fairly new to the industry. The majority of the developers have less than three years experience. Nearly 24% of the participants had 2-3 years of experience and 20% of those who participated had experience between 1-2 years.  Only 18% had worked for over 4 years.  App developers with 5 years plus experience were just 16%.  About 10% of those who participated had worked even less than one year.

Mobile App Development Firms

The size of mobile app development firms throws interesting insights into the overall dynamics of the app development industry.

• Majority of the developers work independently at 47%
• Just 3% of those participated have a company or firm with 500 employees
• The instances of 500 plus employee app developing firm is almost nil
• Most firms are small with 33% participants having total employee strength between 2-5 and 11% with 6-20 employees

These numbers indicate that the economics of the industry is such that it does not support firms with a big head count and works better with a limited number of employees.

Types Of Mobile Applications

Today you have applications across a wide range of products and services from gaming to entertainment to utilities to education and lifestyle. The survey tells us that which categories are most popular among developers:

The Most In Demand App Store

Android leads with more flexible and easier to adapt mobile application opportunities.  Google Play scores better than Apple’s app store as a result of the lower payment. While Kindle and Windows store see a fairly lukewarm response in comparison.

The preferred choice of platform for most developers remains Android. Once a strong foothold is achieved developers move into other alternatives. Windows Mobile and Blackberry OS are seen as the least user friendly with maximum time taken for delivering OS specific apps.

• Android & iOS platforms dominate global markets at 81% and 75% respectively
• Europe has the maximum Android penetration at 91%, the highest in the individual segments
• Most developers are targeting expansion with Android and iOS operating system over the next 3 years

The Revenue Outlook

Generating a sustainable revenue stream in mobile apps is challenging and many go unnoticed. The monthly average revenue for a mobile app globally is less than $6000 and 55% of developers are making about $1000 per month. Monthly per app revenue ranges between $5-11k per month depending on which platform.    Surprisingly, Windows Phone developers generate monthly average revenue of $11,400 per app, Apple generates $8.1k, and Android generates $4.9k. The survey shows that independent developers are making significantly lower revenue versus the large studios which make at least 30x more.  North America leads in revenue collection across regions at $9.4k per month and Europe comes in second with $5.2k. Despite the rising growth prospects, most developers have less than 10k downloads in the last 12 months and only 15% have hit 1 million downloads.

 Key Challenges for App Development

From the start, app makers are faced with uncertainties and planning carefully becomes an important element to the success of the app. Extensive and effective marketing methods are needed to just to be discovered.  Acquiring the right user base and identifying the appropriate revenue model are tough decisions. Not to mention the design hurdles encountered to provide the best user experience. Top it off with getting immediate feedback and new updates out super-fast are just some of the challenges that keep app developers sitting upright.

The question was asked “What is your primary motivation for app development?” Aside from money as being the primary motivator, developers say it is fun to build apps. They feel a sense of achievement when the project is finished.  The opportunity to work in an exciting industry, learning new things, and the lifestyle are other important factors.

Monetization

Advertising continues to be the primary model for monetizing with nearly 7 out of every 10 app developer using mobile advertising.  Banner, interstitial, and native ads are the top 3 ad formats.  In-app purchase is a very popular method to monetize and will continue to grow rapidly. Last year, in-app mobile advertising spend hit $7 billion. Also, using a mix of ad placement and formats is important to maximise monetization.

Despite the large number of apps coming into the marketplace, the app market is still young and needs to mature. The next five years promise to be more innovative as technology investments start to come to life, giving rise to whole new set of possibilities.

Recently, the Global Mobile App Summit & Awards 2016 (GMASA) came to Bangkok, Thailand. The summit attracted technology executives, experts, and developers to discuss current trends and the outlook of the mobile app market in 2016. Keynote and panel discussions included the latest insights on user engagement, user acquisition, monetization, and much more.  Jakob Lykkegaard, CEO of Playlab says “we are moving away from the times where you only had to care about getting the installs at the lowest CPI, to times where you have to start caring about your users by creating communities, segmented campaigns and tons of other Live operations”.

GMASA’s next stop is in Chennai on May 28 – 29 and this will be an excellent opportunity to understand the global and Indian app market without the noise. India is set to surpass the U.S. in software developers next year and become an integral part of future technological innovation.