Understanding the Potential of the Mobile App Development Market
It’s safe to say that there are few other technological innovations of the digital age that have impacted our daily lives as profoundly as mobile applications. They have drastically changed almost all aspects of our lives, streamlining and improving our day-to-day activities, and making things easier. From ordering takeaway to checking our bank balance, to how we communicate with each other – now there’s an app for everything.
Forecasted to bring in revenues exceeding $189 billion by 2020, the mobile app development market is already a global juggernaut. However, as innovations in mobile technologies continue to advance, the industry is set to grow even more over the coming years. According to an industry overview conducted by Statista, the total number of mobile application downloads is forecasted to reach a staggering 352 billion. To put things in perspective, it was 149 billion in 2016.
Over the course of this blog, we’ll talk about the current state of the mobile app market, discuss the key drivers behind its growth, and take a look at some of the upcoming trends and technologies that are set to have an impact on the future prospects of the industry.
Still, Lots of Room to Grow
As we’ve already mentioned, the gross annual revenue generated by the mobile application industry is set to surpass the $189 billion mark in 2020. If we consider that the industry generated just $41.1 billion in 2015, it really puts into perspective the rapid rate at which the industry is growing. In terms of gross revenue, the industry has more than quadrupled in size in a span of just 5 years.
This rapid growth is not showing any signs of slowing down, which indicates that the market isn’t saturated by any means. According to Statista, around 2.71 billion people around the globe are smartphone users – that’s just over 37% of the global population. This shows that this is just the beginning of the much-heralded smartphone revolution.
Furthermore, a survey conducted by Forrester revealed that more and more companies are now considering mobile as a key driver of business transformation rather than just another development channel. Forrester also projected that the percentage of companies using mobile as a fully integrated module of their overall business strategy would increase from 18% in 2016 to 25% in 2017.
Consumers today are evolving at a faster rate compared to businesses. These days, mobile internet has become a must for many users.
As far as mobile app popularity goes, it’s likely that aggregator apps are going to move to the forefront. These applications source content from multiple online resources and combine it into one streamlined user-friendly interface. The content can be anything – ranging from subjects of interest, such as sports, to breaking news. Some examples of aggregator apps that are popular include News360, Feedly and Flipboard.
The primary reasons behind the rising popularity of aggregator apps have been the convenience they provide, and their ability to improve the shopping experience. An ideal example is Facebook’s “Messenger” app. In addition to allowing users to read their news feeds, the app also lets them order rides from services such as Uber and Lyft.
How Mobile Apps Are Fueling Business Growth
Mobile applications have undoubtedly helped businesses become more competitive, and enhanced their ability to meet customer requirements and expectations. As mobile apps are constantly updated to meet consumer requirements, it allows developers to be more imaginative and effective. More and more businesses are focusing on developing free branded apps as it provides them with a perfect way to increase brand awareness and the consumer feedback they get, helping them to make their product more attractive.
Mobile apps have also become vital in the world of online shopping. Online retail giants such as eBay and Amazon have amassed millions of downloads across different mobile platforms. By allowing consumers to shop from anywhere at any time, mobile apps have enabled them to achieve instant gratification. This has had a positive impact on the direct revenues generated by businesses.
Furthermore, mobile apps have also allowed financial institutions and businesses such as banks to make transferring and depositing money easier for their clients. With some of today’s mobile banking apps, you can transfer money or complete transactions with just a “bump” of the phone.
The Mobile Application Spectrum
Today’s high-resolution displays, powerful graphics and laser-fast CPU’s have turned smartphones into robust gaming machines. Studies conducted by App Annie revealed that 85% of the revenue generated by the mobile app market in 2015 came from mobile games. This figure denotes a worldwide total of nearly $35 billion.
The time spent by users in various categories of mobile apps has also increased dramatically. This quick rise in application usage saw gaming apps being overtaken by non-gaming ones. According to Flurry Analytics Blog, the following trends and patterns were recorded in mobile app usage:
- Device interface customization applications such as wallpapers, launchers and icons topped the charts with a stratospheric rise of more than 330%.
- Mobile versions of magazines and newspaper grew an impressive 135%, which placed them in the second position.
- Productivity apps and tools grew 125%, which got them 3rd
- Shopping and lifestyle apps grew 81%, which placed them 4th on the chart.
- Health, travel and sports apps also saw their user time increase by 53 to 54%.
- The only outlier was gaming apps. Their user time fell by 1%.
Mobile App Monetization Models
Let’s take a look at the mobile app monetization models that are currently popular.
Direct Sales Model
While the fact that there’re no paid apps in the list of highest revenue-generating applications seems ironic, there’s a perfectly logical explanation. The thing with paid apps is that generally, there are only videos, screenshots and descriptions to provide a preview of the app before it’s purchased – things that are often insufficient to convince users to purchase the app. However, paid apps are still winning on some fronts, even if they aren’t doing so well in the popularity battle.
The term “freemium” is basically an amalgamation of the ‘free’ and ‘premium’. With the freemium app model, users basically get the rudimentary features for free but have to pay a subscription or one-time fee in order to experience the app’s full functionality.
Generally, only a minor percentage of the users are willing to pay, As a consequence, securing the highest possible number of downloads becomes the primary priority for apps that follow the freemium model.
While this model is criticized for being exploitative, it has a remarkable potential for success when implemented thoughtfully. A good example of such apps is Skype.
Like the freemium model, users have to pay for apps that follow the subscription model. However, unlike the freemium model, the subscription model requires users to pay for all of the features instead of a select few. The primary advantage of the subscription model is its excellent potential of generating a long term, predictable flow of revenue.
Subscription-based applications such as Luminosity and Netflix have been hugely successful.
In-App Purchases Model
This monetization model is quite common amongst product catalog apps and mobile games. A perfect example of apps that follow this model is MeetMe. While it’s primarily a social app, it also allows users to buy certain services and goods. The clear sales model of in-app purchases allows developers to generate a good income.
This monetization model is relatively new in the mobile app development industry. The concept of Crowdfunding is quite simple and straightforward. Developers pitch their application idea on an online crowdfunding platform such as Indiegogo or Kickstarter, requesting funds in the form of donations. If the project is interesting and attractive enough, it may receive funding that significantly exceeds the amount that was requested originally. Projects that are mediocre generally fall well below the target.
This is perhaps the most popular mobile application monetizing model there is. Why? Well, the reasons are pretty obvious. The number of free app downloads is skyrocketing and businesses are beginning to realize that there are few other marketing platforms that are as far-reaching as mobile apps. According to a report by HIS Markit, it’s projected that, by 2020, in-app advertising will attract annual revenues in excess of $53 billion. That’s more than 60% of the revenue generated by mobile display advertising.
Mobile App Trends That Are Set to Influence the Industry over the Future
Now that we’ve gone over the current state of the mobile app development industry and how mobile apps are currently being monetized, let’s delve into the current and upcoming trends that are set to define the direction the industry will take over the coming years.
Virtual & Augmented Reality
It’s been a while now since AR and VR technologies first emerged. While they may have lost their ‘wow’ factor, these technologies are considerably more refined now and are starting to become a mainstream feature in modern mobile devices.
Virtual and augmented reality tools have been at the forefront of the mobile revolution and have been critical in making the mobile gaming industry what it is today. We’re pretty sure you’re familiar with how much hype ‘Pokémon Go’ created. Well, that was just the tip of the proverbial iceberg.
Globally popular social apps such as Snapchat, Instagram and Facebook Messenger have all incorporated Augmented Reality since then, and have seen their popularity skyrocket as a consequence.
An ever-increasing number of companies and app developers are realizing the incredible potential of VR and AR technologies in terms of enhancing user engagement. These technologies are certainly one of the best ways to make mobile apps more interactive and attractive.
Chatbots as Infinitely Efficient Employees
Recently, chatbots have become increasingly valuable for businesses. Why? Well, there are 2 primary reasons:
- Highly Personalized Customer Experience: The highly intelligent and intuitive software solutions allow companies to provide faster, more efficient, and more personalized customer experience. Thanks to chatbots, issues can now be addressed and solved in a matter of minutes.
- Makes it Easier for Customer Service Specialists: According to a survey by Statista, customer service specialists have reported increased job satisfaction since delegating routine tasks to chatbots. When implemented in the right manner, virtual assistants are essentially employees that can offer incalculable performance. And, the only way to implement them correctly is through using the best techniques in mobile application development. Incorporating a chatbot to your Skype, Facebook or Slack corporate messenger will enhance the experience for both, the staff and the customers. The best news is that the evolution of AI technologies has made it possible for chatbots to be integrated with native mobile applications.
With today’s 4G and LTE networks, consumers have lofty expectations when it comes to app startup and download speeds. The modern user is attracted to apps that don’t need to be downloaded and can start within seconds.
Since being announced initially at the 2017 Google IO Conference, instant apps have evolved significantly and gained widespread attention and acclaim. These simple, small-sized, user-friendly apps offer a performance that large complicated apps simply can’t match. Consequently, more and more mobile app development companies are shifting their focus to implementing similar solutions.
The Rising Popularity of Mobile Payments
The financial industry is undergoing a massive change, and mobile banking services are at the heart of it all. Remember the last time the payment process was revolutionized (cash to cards)? Well, the second revolution is underway and the age of mobile payments has truly begun.
Mobile payments are a faster, easier and most importantly, the safest way of spending money. Consequently, an increasing number of consumers are using their mobile phones, or their “m-wallets” to make purchases.
Apps that You Can Wear
When wearable gadgets first emerged a few years ago, a lot of people considered them to be impractical and a fad that would fade away fast. Well, they were quite mistaken. Wearable gadgets such as smartwatches haven’t only stuck around, but they have also evolved considerably, both in form and function.
And that’s something that’s unlikely to change over the next few years. Wearable gadgets are expected to continue improving and their popularity is expected to keep growing as well. Because of their rising popularity, wearable smart devices are becoming the center of attention for an increasing number of mobile app development companies.
You can expect the apps for collecting, tracking, transmitting and processing significant data to improve considerably in the near future.
AMP and its Potential
Thanks to the lightning-fast 4G and LTE connectivity we have today (and 5G is just around the corner), the average mobile user today has quite lofty expectations when it comes to the loading speed of web pages and mobile applications. The average user doesn’t wait for more than 3 seconds for an application to load, which is a big concern for developers whose otherwise excellent app has a long loading time. Long loading times can impact the overall profitability of an app and may require additional investments and optimization.
Accelerated Mobile Pages (AMP), on the other hand, can save you both, money and time. Essentially a smaller version of standard HTML, AMP increases the performance and the loading speeds of web pages. According to a CNBC report, AMP deployment resulted in a 75% decrease in mobile page loading time.
5G Is Around the Corner
2019 is going to be the year when 5G finally spreads across the globe. Around 20 times faster than 4G, the new technology is set to revolutionize the mobile application market. You’ll be able to install apps in the blink of an eye that currently take 5 to 10 minutes to download. Even the bulkiest, the largest of applications will perform smoothly, which will create room for advanced security improvements and functionality development within the mobile app industry.
In fact, some companies have even made huge steps towards 5G adoption. Samsung and Huawei became the first tech companies to announce 5G supporting smartphones when they launched their flagship Galaxy Fold and Mate X phones at this year’s Mobile World Congress.
EX2 Outcoding is a nearshore software development firm based in Costa Rica. Its quality mobile app development services include extensive cross-platform integration, UX design, testing, requirements analysis and much more. Contact us today for more information.