According to a new report from research firm IDC, annual mobile app downloads are expected to jump from just 10.7 billion in 2010 to 182.7 billion in 2015. The company noted that that developers should keep a close eye on in-app purchases as the primary focus for monetizing applications – a far different approach than the standard method of relying on the initial app purchase. “This shift is most evident in the free app category, where in-app purchases allow users to buy a more functional version of the app or to turn on additional features,” the report said. “In this instance, the mobile apps space is largely emulating the success of mobile games that have long incorporated in-game purchases of additional levels, features, and functionalities as a key revenue source.” IDC argued that ad-supported applications and those that offer in-app purchase options must continue to keep users attracted over time. “The user sustainability trifecta of social networking, location, and the cloud are now increasingly being supported by the business model financial trifecta of application store purchases, in-app purchasing, and in-app advertising,” said Scott Ellison, vice president of mobile and connected consumer platforms at IDC. Read on for the full release.
IDC Forecasts Nearly 183 Billion Annual Mobile App Downloads by 2015: Monetization Challenges Driving Business Model Evolution
28 Jun 2011FRAMINGHAM, Mass., June 28, 2011 – Mobile app downloads are forecast to soar from 10.7 billion in 2010 to 182.7 billion in 2015, according to a new forecast from International Data Corporation (IDC). While this number is impressive, the even bigger story behind the numbers is an impending shift away from the current, near-total reliance upon initial app download purchases as the primary focus of app monetization to a rapidly growing focus on in-app purchasing to fund business models.
This shift is most evident in the free app category, where in-app purchases allow users to buy a more functional version of the app or to turn on additional features. In this instance, the mobile apps space is largely emulating the success of mobile games that have long incorporated in-game purchases of additional levels, features, and functionalities as a key revenue source. This shift became very evident in January with the Appcelerator/IDC 1Q11 Mobile App Developer Survey Report, in which developers reported dramatically increased plans to incorporate in-app purchasing, mobile advertising, and mobile commerce in their apps.
“App developers are not only focusing on ways to ‘appify’ just about every interaction you can think of in your physical and digital worlds, they are now focusing on longer term sustainability issues,” noted Scott Ellison, vice president, Mobile and Connected Consumer Platforms. “The user sustainability trifecta of social networking, location, and the cloud are now increasingly being supported by the business model financial trifecta of application store purchases, in-app purchasing, and in-app advertising.”
Business models that seek to include in-app purchasing and in-app advertising must, by definition, further engage users, both within the app itself and over time. Together these dynamics are driving significant shifts in how apps are conceptualized, the integration of additional services and features like social networking and location to more deeply engage users, and how apps are actually developed in terms of incorporating in-app purchasing.
The IDC study, Worldwide and U.S. Mobile Applications, Storefronts, Developer, and In-App Advertising 2011-2015 Forecast: Emergence of Postdownload Business Models (IDC #228221), provides IDC’s current and best estimates for the rapidly evolving mobile applications market. The report includes a forecast of annual downloads and revenues for mobile applications, OS-affiliated storefronts, and independent distributors both worldwide and in the United States. Mobile application developer revenue projections are further divided into app unit sales, in-app purchasing, and in-app advertising. IDC’s outlook on this market is informed by continuous conversations with a wide variety of players in the mobile app marketplace.. Other sources of information include company financial and product announcements, and the Appcelerator/IDC Mobile Developer Report, a quarterly survey of Appcelerator’s 70,000+ mobile app developer base.
