A major shift in the U.S. app economy has just taken place. In the second quarter of this year, U.S. consumer spending in non-game mobile apps surpassed spending in mobile games for the first time in May 2022 and the trend continued in June. This drove the total revenue generated by non-game apps higher for the quarter, reaching about $3.4 billion on the U.S. App Store, compared with $3.3 billion spent on mobile games.
After the shift in May, 50.3% of the spending was coming from non-game apps by June 2022, according to new findings in a report from app intelligence firm Sensor Tower. By comparison, games had accounted for more than two-thirds of total spending on the U.S. App Store just five years ago.
The trend was limited to the U.S. App Store and was not seen on Google Play, however. In Q2, games accounted for $2.3 billion in consumer spending on Google Play in the U.S., while non-game apps accounted for about $1 billion.
Image Credits: Sensor Tower
This shift in the U.S. app market is the most significant finding in the new report and demonstrates how successfully Apple has managed to create a subscription economy that allows a broader range of apps to generate sizable revenues.
The new data also supports this, as it shows it’s not only the biggest players that are benefiting from subscription revenue growth. In Q2 2022, 400 apps generated more than $1 million in consumer spending on the U.S. App Store, which is eight times the total from the same quarter in 2016. In addition, 61 U.S. App Store non-game apps generated at least $10 million in U.S. consumer spending in Q2 2022 — that’s more than the number of non-game apps that had generated $1 million+ in revenue in Q2 2016.
A handful of non-game apps also topped $50 million in U.S. consumer spending in the quarter, including YouTube, HBO Max, TikTok, Tinder, Disney+, Hulu and Bumble.
Image Credits: Sensor Tower
Subscriptions are the major revenue growth driver here, as non-game apps grew at nearly twice the rate — at a 40% compound annual growth rate — since June 2014 compared with less than 20% for games, the report found.
The trend is a significant reversal of what mobile app spending looked like just a few years ago.
In 2019 and early 2020, for instance, mobile game spending growth was consistently higher than non-game spending. Game spending then surged again at the start of the COVID-19 pandemic. But by late 2020, non-game growth had caught up and the gap widened in 2021.
Image Credits: Sensor Tower
While non-games are enjoying their new dominance, it’s not all great news for the app economy in this most recent quarter. The report also found that U.S. app spending overall declined for the first time in Q2, following the wind down from the spike generated by the pandemic.
At the start of the pandemic (around April 2020), year-over-year growth in consumer spending had jumped from around 20%-30% in 2019 to 35%-55% over the next 12 months. But in May 2022, U.S. spending declined for the first time as consumers began to shift their dollars back to other non-mobile activities like restaurant dining and travel.
Despite this decline from the pandemic highs, consumer spending in Q2 2022 was still up 71% over Q2 2019.
In other key findings from the quarter, summer travel drove travel apps to record high downloads in the U.S. and U.K., and airline app downloads in these markets were up 30%+ compared with Q2 2019, before the pandemic.
Meanwhile, the top-five ticketing apps saw 10 million downloads, up 70%+ from Q2 2019 as consumers returned to concerts, sports games and other events.
Image Credits: Sensor Tower
Worldwide app downloads slowed also slowed in the quarter, as installs totaled 35 billion in Q2, down 2.5% year over year. App Store downloads fell 1.3% to 7.8 billion and Google Play installs dropped 3% to 27.2 billion.
The most downloaded non-game app worldwide was TikTok, which has held the top position eight times out of the past 10 quarters. It was followed by Instagram, Facebook, WhatsApp and Snapchat. TikTok (including Douyin in China on iOS) had 187 million downloads in the quarter.
The top mobile game globally was Subway Surfers, with over 80 million downloads — its highest total since 2014, and following the game’s maker Sybo’s acquisition by gaming giant Miniclip in June 2022. The number two title was Garena Free Fire with 70 million installs for the third quarter in a row.
China was still the larger contributor to iOS gaming revenue, despite a pause on game approvals in May 2022. In Q2, 65% of consumer spending on China’s App Store was on mobile games, while 35% was on non-game apps in Q2 2022 — percentages that remained unchanged from a year ago in June 2021. Japan’s App Store still generates the third-most gaming revenue on iOS and it maintained this position, though games’ share shrank a bit to 68% of the total spend, down from 70% in June 2021.
US App Store revenue from non-game apps just topped games for the first time
Архив метки: Apple
Google halts KakaoTalk updates on Play Store in Korea after messaging app refused to remove its own payment links
Google has stopped providing updates to popular messaging app KakaoTalk in South Korea, according to a local report, after Kakao continued using an external payment link in its Android app, against Google’s new in-app payments policy. Google’s new policy requires developers selling digital goods and services to use Google’s first-party billing system, but Kakao has been using an external link to its own website.
This is the first time Google has stopped PlayStore users from updating an app after its new payments policy went into effect last month. KakaoTalk can be updated on other app operators such as Apple’s AppStore and OneStore, per the local media report. Two big questions now will be whether Google turns its attention to stopping updates on other apps similarly providing external payment links, or goes one step further and proceeds to remove them altogether.
“All developers selling digital goods and services in their apps are required to use Google Play’s billing system,” Google writes in a note detailing its new in-app payments policy. “Apps using an alternative in-app billing system will need to remove it in order to comply with the payments policy… Starting June 1, 2022, any app that is still not compliant will be removed from Google Play.”
Google said last year it would comply with alternative billing systems in South Korea by allowing Android app developers to use third-party payment options, but to offer them alongside Google Play’s own billing system after the country passed its in-app payment law — the first of its kind in the world — in August last year. That law, pointedly, is regularly referred to as the “anti-Google law.”
Developers, however, can’t add links that point to their own websites inside their apps, which would allow their users to buy directly, bypassing Google’s billing entirely.
South Korean app developers and content providers have increased their paid subscription and service fees on Google’s Play due to the heavy 15-30% commissions now required following Google’s policy changes.
South Korean content providers raise service fees in the wake of Google’s in-app payment policy
The Korea Communications Commission said in April that the prohibition of app developers from using the weblink payment option would breach South Korea’s app payment law that requires operators of app stores to allow third-party payments. The KCC told TechCrunch last month that it would keep an eye on Google to see if they would remove any app against its new policy.
Apple announced last week that developers will have to submit a separate binary for iOS and iPadOS “distributed solely on the App Store in South Korea” to use a third-party payment system for the South Korea App Store.
TechCrunch has reached out to Kakao, which did not immediately respond to a request for comment about Google’s move. Google did not respond to requests for comment.
Google halts KakaoTalk updates on Play Store in Korea after messaging app refused to remove its own payment links
Google will reimburse developers $90 million to settle a lawsuit over Play Store earnings
Google said Thursday it will pay $90 million to settle a lawsuit with U.S. developers that accused Google of abusing its power of app distribution and charging an unfair fee of 30% for app purchases and in-app purchases made through the Play Store.
The company noted that U.S. developers who made less than $2 million each year between 2016 and 2021 through Google Play Store earnings will be eligible for compensation.
“A vast majority of US developers who earned revenue through Google Play will be eligible to receive money from this fund if they choose. If the Court approves the settlement, developers that qualify will be notified and allowed to receive a distribution from the fund,” the search giant noted in a blog post.
Hagens Berman Sobol Shapiro LLP, the legal firm that represented the plaintiffs, said that developers were entitled to a minimum compensation of $250 — with some settlements going above $200,000. The firm noted that more than 48,000 U.S. developers are eligible for payment by Google.
The plaintiffs originally filed the case against Google in 2020 in California alleging that the company gained a monopoly in the Android app distribution space “through a series of anticompetitive contracts, strategic abuses of its dominance in other Android software applications, deficits in consumer knowledge and information, and the cultivation and exploitation of device users’ fear of malware.” The case document also harped upon the fact that Google had a default 30% Play Store tax for developers on the sale of apps or in-app purchases.
To handle the criticism on the 30% Play Store tax, in 2021, Google slashed its cut to 15% on the first $1 million earned by a developer each year. Later, it reduced Play Store fees to 15% for subscription-based apps and as low as 10% for media apps in select categories like e-books or music distribution. According to an estimate by damages expert, Dr. Michael Williams, this fee reduction could save developers more than $109 million in service fees until 2025.
The Mountain View-based company said that apart from the $90 million payment fund, it is revising its Developer Distribution Agreement document to make it clear that developers can contact users through out-of-app means like promotional emails — similar to a change Apple made last year — if they have obtained that information in the app. The firm said it’ll introduce a new section in the Play Store named “Indie Apps Corner” to highlight apps made by small startups and independent developers, too. What’s more, the firm will publish annual Google Play transparency reports with details like app removals and account terminations.
Currently, Google and Apple force developers to use their own payment systems for in-app purchases on apps distributed through their own app stores. However, that might change due to many lawsuits and legislation against these companies in different geographies. Last year, Google agreed to let developers in South Korea use third-party payment options — after the country passed a new law over digital payment systems while reducing its service fees by 4%.
Over the last few months, Google has made different agreements with Spotify and Match Group over using alternative payment systems for their apps. When announcing a deal with the former, the search giant said that “we will be exploring user choice billing in other select countries.”
Google will reimburse developers $90 million to settle a lawsuit over Play Store earnings
Meta has reportedly shelved its watch with in-built cameras
Last year, leaked photos of Meta’s smartwatch with a camera made the rounds. But the product may never make it to the light of day: according to a report in Bloomberg, the parent company of Facebook has halted its development.
The report does not give a reason for the about-face, but in April, the tech giant said that it lost $3 billion in Q1 in metaverse development.
Meta (and before it Facebook) has been looking for years for a route into hardware to diversify its business and to fill out a more vertically integrated approach to building tech products, not unlike Apple and Google.
While Facebook-owned Oculus has produced the company’s biggest hardware hits, the watch becomes the latest in a line of stops and starts in Facebook’s hardware efforts. Others have included an ill-fated attempt to break into smartphones, the Portal screen, and a many-years-long effort with glasses (still not launched).
One reason for the shift could have been also due to design issues. Bloomberg said that a prototype of the watch had two cameras — a five-megapixel on the front and one rather oddly placed 12-megapixel camera on the back.
The company wanted to use electromyography and convert nerve signals into digital commands, which could be helpful in games and virtual world experiences. But the second camera proved to be a roadblock to that feature, and the firm decided to stop its development.
Meta had been aiming at releasing the watch next year with a $349 price tag.
According to photos and videos of the prototype, apart from the camera, the smartwatch had features that are now fairly standard for smartwatches and wrist wearables, such as activity tracking, notifications and cellular connectivity through eSIM. The device, codenamed Milan, was touted to have an 18-hour battery life.
This is not the end of the line for some of the tech it has built, it seems. Bloomberg’s report suggested that Meta is still working on other wrist-based wearables. The company showed off an AR-controller prototype last year — before it renamed itself Meta — that could be worn on your wrist.
Meta declined to comment on the story.
Meta has reportedly shelved its watch with in-built cameras
Samsung reportedly cutting smartphone production by 30M
All is not well in smartphone land. The industry was headed for a slowdown well before SARS-CoV-2 entered the picture. The glory days of expanding markets and bi-annual upgrades are seemingly at an end, and things have only been exacerbated by two years of financial hardships and supply chain constraints.
For all these reasons, it’s not surprising that manufacturers are pulling back on manufacturing. A new report from South Korea’s Maeil Business News has the world’s leading smartphone maker ramping production down by 30 million units for 2022. The news comes as sales are further hampered by the conflict in Ukraine. In March, the company followed fellow tech giants Microsoft and Apple by suspending sales in Russia.
Apple, too, has been feeling the pain. Recent Bloomberg reports noted that the iPhone maker is throttling plans to manufacture an additional 20 million phones in 2022. Instead, its numbers are reportedly going to remain flat from 2021. Those reports follow several quarters of iPhone sales that had managed to buck many of the industry’s macro trends, but the company might be coming back down to Earth, even with the imminent arrival of the iPhone 14.
It’s a perfect storm of industry and global factors that have gotten us to this place. It’s not panic time for the larger manufactures — they’ll almost certainly come out of the dip unscathed. But there are broader questions that remain about the industry going forward. Biggest of all is whether this is a lull following a decade of explosive smartphones sales, or whether not even the arrival of new technologies like foldable screens will kickstart a return to the mobile golden age.
Samsung declined to comment on the reports.
Samsung reportedly cutting smartphone production by 30M