Apple’s App Store Continues to Crush Google Play in Monetization


The COVID-19 pandemic has driven a surge in demand for various forms of home entertainment, including mobile apps and games. Apple‘s (NASDAQ:AAPL) iOS App Store has long dominated Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Google’s Android in terms of monetization, even though Google Play has considerably more downloads than the App Store. That dynamic hasn’t changed, according to recent estimates from mobile analytics specialist Sensor Tower.

Here’s what mobile tech investors need to know.

Person playing a game on an iPhone

Image source: Apple.

Google leads in downloads, but Apple brings in more money

Total consumer spending on mobile apps jumped by 32% to $29.3 billion in the third quarter. That was stronger growth than under normal circumstances, which Sensor Tower attributes to the coronavirus outbreak. Overall app downloads and installs increased to 36.5 billion across both dominant mobile platforms. Android represented the bulk of downloads, but iOS brought in far more money for developers and platform operators.

Platform

Q3 2020 Revenue

Q3 2020 Downloads

App Store

$19 billion

8.2 billion

Google Play

$10.3 billion

28.3 billion

Total

$29.3 billion

36.5 billion

Data source: Sensor Tower.

The App Store continues to generate about twice as much revenue as Google Play, a proportion that is mostly consistent with a year ago. The consumer spending includes upfront app purchases, in-app purchases, and in-app subscriptions. Both tech companies take a 30% cut of digital sales and in-app subscriptions, with the commission for subscriptions falling to 15% after the first year.

Mobile gaming comprised the majority of consumer spending as users looked for ways to entertain themselves while staying at home. Spending on mobile games jumped 27% to $20.9 billion, or over 70% of total spending. Of that total, the App Store brought in $12.4 billion while Google Play generated $8.5 billion of gross mobile gaming revenue.

China’s Tencent, a dominant mobile game publisher, had the two highest-grossing games in the third quarter, Honor of Kings and PUBG Mobile. Roblox, the online game creation platform that is preparing  to go public next year, enjoyed 119% revenue growth and is approaching $2 billion in lifetime sales. Spending is highly concentrated among the most popular games, with the top 5 games representing 12% of all mobile gaming revenue.

What comes next

Looking ahead to the rest of 2020, consumer spending trends may shift, particularly as Apple has introduced greater home screen customization options in iOS 14. For example, one mobile app designer recently brought  in over $100,000 in less than a week after releasing a custom iOS icon pack.

Farther out, Google is preparing to start enforcing its policy requiring developers to integrate Google Play billing a year from now, entitling it to a cut of sales. Meanwhile, Apple continues to face intense antitrust scrutiny over its 30% cut since critics argue that the App Store represents a monopoly of iOS app distribution.





Source link