App Annie: App store spending climbs 20% to record $22B in Q1

Brief:

Google Play's app downloads grew 10% in Q1 2019 from a year earlier, extending the Android platform's lead over Apple's App Store to 170%, researcher App Annie found in a quarterly report. Strong emerging-market growth, along with the popularity of automotive and entertainment apps, spurred Google Play's lead.
Combined spending on Google Play and the App Store climbed 20% year-over-year to top $22 billion, setting another record for the most lucrative quarter. Total app downloads from the mobile stores rose 10% to 30 billion from a year earlier, also breaking a record for the largest quarter ever.
Dating app Tinder became No. 1 for consumer spending on non-gaming apps for the first time, surpassing former leader Netflix.

Insight:

App Annie's report confirms other accounts about the strength of the app economy, which defies flat or declining sales for mobile devices. Apple isn't due to release results for the first three months of the year until later this month, but the iPhone maker reported an increase in app downloads during the week after Christmas — typically a strong period for app downloads — and will be looking to carry forward the strength into 2019. Google typically doesn't report results for its app store.

Among app categories in Q1, games showed continued demand as better connectivity and processing power among newer smartphone models supported seamless gaming experiences that rival video game consoles and desktop computers, App Annie said. Among non-gaming apps, Facebook's lineup — including Instagram, Messenger and WhatsApp — maintained their place in the top 10 apps by downloads as mobile users showed no sign being deterred by the social network's data-privacy scandals. Tik Tok, the social network for sharing karaoke video clips, and video editing app Like-Magic Music Maker were ranked in the top 10 for the first time, per App Annie, demonstrating the growing popularity of the music-related apps.

The demand for gaming content likely will support the video game streaming platforms that both Google and Apple plan to introduce this year. However, the rollout of those gaming services may have a negative effect on app downloads as gamers shift their playtime to streaming platforms.

"It's all about services and content, and the tech giants are making mobile the centerpiece of their growth strategies," Lexi Sydow, App Annie's senior market insights manager, said in the report.

Netflix's disappearance from its longstanding No. 1 position follows the video streaming company's ending new subscriptions from the app stores, which it did in order to cut down on fees that Apple and Google collect. Apple and Google charge app developers a hefty 30% fee of subscription revenue during the first year, which is then cut to 15% in subsequent years. Those fees led to a growing backlash from developers including Epic Games, the maker of the hit game "Fortnite," which last year bypassed Google Play altogether by letting players download the Android version of the app directly.

Food and drink apps saw the most growth in market share of downloads globally as more smartphone users get into mobile ordering, payment and delivery. The top three apps in the category for Q1 were delivery apps Uber Eats, DoorDash and Grubhub.