On average, Apple generated more than $ 1 billion a week from more than half a billion people who visited its App Store every week in 2019, according to new data.
That is $ 54.2 billion in the year.
Chasing the tail (long)
There are many reasons for this, mainly a successful push towards subscription-based business models and a growing consumer acceptance that there really is value in digital products.
This renaissance in digital engagement is also generating new opportunities for companies that seek to meet customers where they are with the first digital experiences.
Subscription revenue increased in 2019, with more developers offering users to test their applications before paying for the full set of features, according to SensorTower data. Increasing subscription revenues show that buyers will pay monthly fees for applications.
Cultivating this type of perception has been one of the great challenges for the technology industry. In the early years, Napster’s success and file sharing showed what can happen to industries when people do not value digital products.
The subsequent success of iTunes, Spotify, Netflix, Amazon Prime and services such as iCloud and Dropbox helped most users recognize the digital value.
Now it is generating massive money. User spending on the App Store increased 16% year-over-year from $ 47 billion in 2018. The games accounted for a powerful $ 37 billion of this, while entertainment applications accumulated $ 3.9 billion more.
We are also seeing that physical sales of products become more digital.
“People are more connected today than ever” said Jason Woosley, vice president of products and trading platforms at Adobe.
“We all have a smartphone in your pocket, and that is really what is driving the increase in mobile commerce and electronic commerce in general. You can literally think of something you need and simply buy it at that time.”
“This always connected and always connected trend will continue to accelerate, especially as the definition of mobility continues to expand to new devices and Internet access modes.”
Better in the store
Apple recently announced that App Store developers had earned more than $ 155 billion in App Store sales since 2008. The company added that “more than a quarter” of these sales occurred last year and confirmed that customers They spent $ 1.42 billion on the App Store between Christmas Eve and New Year’s Eve 2019: an increase of 16%. Apple said the App Store generated $ 386 million in sales on New Year’s Day 2020, slightly more than the $ 322 million generated on the same day last year.
The trend is not simply visible in the Apple App Store; even Google Play also experienced higher revenues, although the sum generated by iOS was 85% higher than the $ 29.3 billion spent on Google Play.
The digital value chain.
This barrage of statistics shows that the perception of digital value is growing. (This is also demonstrated by the news generated by Pokemon Go almost one billion dollars in revenue only in in-game purchases last year).
That is something that should matter to business professionals trying to identify and offer new services and business models.
The willingness of the consumer to pay for digital services shows that business models such as “information as a service”, expansion in digital channels and sponsorship of key digital experiences are more likely to generate revenue, attract customers or improve relationships than before .
In an increasingly intense competitive environment, the provision of such services may be mandatory, and there may be a way to go, given Gartner’s analysis that 84% of consumers who used digital tools and services in 2018 reported experiences ” disappointing. “
- 60% of companies that have been involved in digital transformation projects have also built new business models.
- 78% of customers use mobile channels to communicate with brands.
- 80% of millennials are more likely to buy from companies that have a mobile customer service portal.
The attention economy is not stable at all. A better product or service can appear and quickly steal hearts and minds won with effort. This has always been the case in business, but the speed with which digital solutions can be developed and distributed means that competition is fast, and the response must be more agile.
It is an intense environment.
“By 2022, 72% of customer interactions will involve emerging technology, such as machine learning applications, chatbots or mobile messaging, compared to 11% in 2017,” Gartner predicted in 2019.
It is interesting that Calm and Headspace became the highest-grossing applications in the health and fitness category on Apple and Android platforms in December.
Perhaps all those “digital first” executives needed a lot of waiting time while facing the challenge of continuous transformation?
Although on a more serious note, this also reflects the willingness of the consumer to invest in a wide variety of technological services, even those that we generally do not associate with “digital.”
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Copyright © 2020 IDG Communications, Inc.