The new AppAnnie statistics for the Korean app market are surprising on many different levels. It is odd indeed that neither Android nor iOS apps have shown download growth in Korea since January 2012. Of course, Korea is a highly advanced mobile market where a large portion of consumers already possess a smartphone. According to Nielsen, smartphone market penetration among online consumers hit 67% in Korea in April 2012 — more than 20 points above Hong Kong or Taiwan. Naturally, Korea is dominated by Samsung (005930), whose smartphone market share hit 70% in July according to some sources.
However, since LTE market penetration is rising in Korea, you would think that app download numbers would also be rising steadily through 2012. In the U.S. market, download volume is assumed to increase by at least 40% in 2012.
But what’s really surprising about AppAnnie statistics is that even with flatlining download volumes, Google Play revenue generation growth is sizzling — up six-fold since January 2012. In stark contrast, iOS app revenue has shown no growth in Korea this calendar year. The soft iOS download trends in South Korea may be one factor leading to the abrupt manner Apple’s new head of South Korean operations exited after just 17 months on the job.
It’s perhaps understandable that Samsung’s impressive smartphone performance in 2012 has blocked Apple (AAPL) from generating any iOS download or revenue growth in Korea during 2012. But it seems bizarre that the phenomenally strong Galaxy S III sales have not driven any Android app download growth, while still delivering torrid, 500%-plus app revenue expansion.
Of course, many of the most popular apps in Korea during 2012 tend to have sophisticated in-game revenue generation strategies. Blockbusters like “Rule the Sky” and “Tiny Farm” are designed to hook their users into buying a stream of upgrades and speed-ups to help with game progression. But why is the Android camp currently so much more successful in squeezing remarkable sales growth from a stagnant pool of downloads in Korea? Could it be just the quality improvement of Google Play relative to its sorry state back in 2011?
Nevertheless, the Korean figures seem to imply that even when download numbers stop growing in Western markets, there is room for substantial sales growth. We are already seeing the game design emphasis shift from maximizing download numbers to optimizing revenue generation among current U.S. smash hits such as “Rage of Bahamut,” “Clash of Clans” and “DragonVale.”
All three are currently in the iPhone’s top-5 chart for revenue generation…. yet none are in the top-100 in download volume.