The app economy isn’t dying, it’s just becoming less dependent on the US

Going global.
Going global.
Image: Reuters/Shannon Stapleton
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The death of apps has been heralded time and again. The knell was sounded once more when research from Nomura and Sensor Tower showed that downloads from the top US app publishers were down 20% last month, compared to a year earlier. “The app boom is over,” Recode pronounced.

Maybe in the US. But it looks like what’s happening is simply a global rebalancing of the app economy, where the sort of hyper-growth US publishers were used to can now be found in developing markets such as India and Brazil. That’s according to a new forecast from analytics provider App Annie, which says the global app economy is on track to be worth $102 billion in four years, driven by emerging market gains.

In other words, the app economy isn’t dying, it’s globalizing. Instead of the US, Japan, and China driving growth, it’ll be India, Brazil, Argentina, Mexico, and Indonesia. Here’s what that looks like charted:

App store revenue from emerging markets is expected to grow at a rate of 29% a year, says Danielle Levitas, who heads App Annie’s forecasting unit. ”India’s the one to look to, because it’s one of the fastest growing smartphone markets in the world,” she says. “That’s hundreds of millions of users entering the app economy.”

The App Annie forecast is backed up by a study from the Pew Research Center, which finds that smartphone ownership in developing countries is rocketing, from 21% in 2014 to 37% a year later. Even with slowing global smartphone sales, there’s still a huge install base of about 2.6 billion smartphones in use this year, according to the industry group GSMA (pdf).

The growth outlook isn’t quite as rosy for the US, of course, although rumors of its app market’s demise may be greatly exaggerated. That’s why Apple is tweaking its revenue model for App Store publishers, introducing sales channels such as subscriptions across the store for the first time. ”Apple invented the App Store,” says Levitas. “You had phenomenal adoption for years, but it’s maxing out.”