Mobile apps are on the rise and Gartner predicts that this year mobile app stores will see annual downloads reaching 102 billion in 2013, up from 64 billion in 2012. Revenue-wise, the figure will hit $26 billion, up from $18 billion last year, though free apps will account for 91% of total downloads. Unsurprisingly, in-app purchases (IAPs) will account for 48% of app store revenue by 2017, up from 11% in 2012.
However, Gartner doesn’t expect to see the strong growth in downloads beyond 2014. In fact, they expect a slowdown in later years, as users accumulate a portfolio of apps they like and stick to.
Free apps currently account for about 60 and 80 percent of the total available apps in Apple’s App Store and Google Play respectively, and the two platforms combined are forecast to account for 90% of global downloads in 2017. These app stores are still increasingly active due to richer ecosystems, and large and very active developer communities, though the firm expects average monthly downloads per iOS device to decline from 4.9 in 2013 to 3.9 in 2017, or from 6.2 in 2013 to 5.8 per Android device.
IAP purchases will drive 17% of the store revenue in 2013 and increase to 48% in 2017, emerging as a major monetization method for apps stores and developers.
“We see that users are not put off by the fact that they have already paid for an app, and are willing to spend more if they are happy with the experience, said Brian Blau, research director at Gartner. “As a result, we believe that IAP is a promising and sustainable monetization method because it encourages performance-based purchasing; that is, users only pay when they are happy with the experience, and developers have to work hard to earn the revenue through good design and performance.”