2019 has been a landmark year for mobile, celebrating a 20 per cent year-over-year growth in consumer spend and a record $23 billion from iOS App Store and Google Play combined in Q3 2019. 2020 is set to be even bigger, with global consumer spend from iOS and Google Play combined hitting $105 billion (excluding third-party Android stores). Understanding what’s driving this growth will be key to succeeding next year. With mobile increasingly integrating into the consumer experience, mobile performance is becoming synonymous with overall market success. It’s never been more important to capitalise on app store revenue.
Streaming services battle for their share of 674 billion hours
In 2020, App Annie forecasts consumers will spend 674 billion hours in the Entertainment and Video Player and Editor categories worldwide on Android phones. Moreover, video-streaming excels on mobile and 10 minutes of every hour spent consuming any form of media — across internet and television — in 2019 will be from streaming videos on mobile. Established players like YouTube and Netflix accounted for the vast majority of time spent on Android phones, but newer entrants are eager to get a piece of this growing pie and they’re capitalising on IP.
Newly launched Disney+, at a price point of $7/month, represents just one of the many well-funded competitors entering an already crowded space and its initial success has been attributed to its capitalisation of its own IP. Disney+’s content library is relatively small — 500 movies and 7,000 individual TV episodes — but includes access to established fan favourites from its other entities, including The Simpsons, Star Wars, and the Marvel Cinematic Universe. Coupled with its investment in new original content related to its Star Wars entity - The Mandalorian - Disney+ already has seen achieved unprecedented success.
Like most subscription-based models, success lies in the ability to create and cultivate user habits. Attracting new users by creating buzz with innovative content formats (like Netflix demonstrated with Bandersnatch) is a pull. However, longstanding habits are created through cult followings of original content series.
How social media apps could thwart Hollywood style investment
When Apple launched Apple TV+ earlier this year, it leaned heavily on its investment in big Hollywood names, clearly understanding that in the battle of the streaming wars, the content is king.
However, while streaming services are spending big on big names, it would be shrewd to pay attention to unexpected competition - in the form of social media apps and the blurred line between entertainment and social. For example, apps like TikTok, which is already ranked #2 in the US in Entertainment on iOS. Consumers spend up to 3 hours a day in mobile worldwide on iOS and Google Play combined. The majority of that time is spent in social media and the social media giants have shrewdly taken advantage of this trend.
The bundling and unbundling of consumer choice
The unbundling of content has meant, ironically, less choice for consumers given the cost of subscribing to multiple services. Thankfully, bundling up services again through strategic partnerships, as Disney and Verizon have done, could mean competition and innovation will provide stability to the industry and benefit the consumer.
To stay competitive in this space, streaming services will need to identify which competitors are long-term threats versus which are simply burning through advertising budgets. Sifting through the latest hype versus the trends that fight into share of time spent on mobile is all in the data: retention rates, time spent and active users.
Boomers wanted to buy it now; Zoomers and Millennials want to rent-it-now
As spending on mobile now accounts for over 50 per cent of all gaming revenue in the global games market, subscriptions will drive deeper engagement and greater customer lifetime value (LTV). In addition, worldwide consumer spend on games is expected to surpass $75 billion in 2020.
By paying for subscription services, consumers gain access to a wider variety of content and services for a fixed fee — something that Gen Z consumers are particularly fond of. These subscription services will work particularly well for families. A curated environment where everything is included for one flat price will be a draw for parents looking to reduce their children’s requests for in-app-purchases.
For Google Play Pass, existing games could get a second wind by finding new revenue streams beyond their existing in-app purchases or in-app advertising. Apple Arcade games developers are free to design new game mechanics without the constraint of integrating in-app purchase (IAP) opportunities. However, to truly sell the value of a subscription vs the established free game download model, publishers will need to work alongside iOS and Google Play to communicate the value of game subscription services.
Games publishers and players will finally legitimise 5G’s potential.
While speed has been the main talking point around 5G, it’s the low latency that excites gamers and publishers alike - especially for multiplayer games. . In October 2019, Call of Duty: Mobile was the top ranked game by global downloads across iOS and Google Play in its first month of release, while PUBG MOBILE, and Free Fire continued to rank 5th and 6th respectively by downloads, more than a year after their initial launches. Among the top 10 games by downloads in October 2019, core multiplayer online games also had the most time spent user. 5G is still in its infancy, but telcos are moving to expand coverage in 2020, and gaming is likely to be the first test of market validation.
Progressive web apps will be the bridge between mobile web to mobile app
Progressive Web Apps (PWAs) are mobile websites that look and feel like apps — without requiring users to immediately take the extra step of downloading an app. PWAs can help increase conversions by simplifying the user experience. We know apps offer a richer user experience but someone stumbling across your website is unlikely to download if they’re simply browsing. PWAs remove that friction and help to build stronger consumer relations with better first impressions.
In fact, PWAs have faster loading times than websites, which is particularly valuable where connectivity is poor and in developing markets where we see the lite version of an app has similar levels of popularity as the full one. In India, for example, Facebook Lite had nearly 90 per cent of the downloads of Facebook in H1 2019.
While PWAs are generally less valuable for apps that require sign-in to leverage full functionality (e.g banking and communication), they will be a valuable option for verticals such as travel, retail and news — where users can test an experience before committing further. For example, Trivago, has found success with PWAs, seeing a 150 per cent increase in engagement among those who used the PWA versus the mobile site.
From travel, banking, retail and entertainment, the way consumers use and spend on mobile will shape how businesses interact with consumers.
Adit Venkatraman, Market Insights Manager, App Annie