US App Store revenue from non-game apps just surpassed games for the first time – TechCrunch

US App Store revenue from non-game apps just surpassed games for the first time – TechCrunch

A big shift has just happened in the US app economy. In the second quarter of this year, US consumer spending on non-gaming mobile apps surpassed spending on mobile games for the first time in May 2022, and the trend continued in June. That pushed total revenue generated by non-gaming apps higher for the quarter, reaching about $3.4 billion in the US App Store, compared to $3.3 billion spent on mobile games.

After the change in May, 50.3% of spending came from non-gaming apps by June 2022, according to new findings in a report from app intelligence firm Sensor Tower. By comparison, games accounted for more than two-thirds of total spending in the US App Store just five years ago.

The trend was limited to the App Store in the US, but was not seen on Google Play. In the second quarter, games accounted for $2.3 billion in user spending on Google Play in the US, while non-game apps accounted for about $1 billion.

Image Credits: Sensor tower

This shift in the US app market is the most significant finding in the new report and demonstrates how successfully Apple has been able to create a subscription economy that allows a wider range of apps to generate significant revenue.

The new data also supports this, as it shows that it’s not just the biggest players that are benefiting from the growth in subscription revenue. In the second quarter of 2022, 400 apps generated more than $1 million in user spending in the US App Store, eight times the total in the quarter of 2016. In addition, 61 non-game US App Store apps generated at least $10 million in US User Spend in the second quarter of 2022 — that’s more than the number of non-gaming apps that generated more than $1 million in revenue in the second quarter of 2016.

Several non-gaming apps also surpassed $50 million in US user spending in the quarter, including YouTube, HBO Max, TikTok, Tinder, Disney+, Hulu and Bumble.

Image Credits: Sensor tower

Subscriptions are the main driver of revenue growth here, as non-gaming apps have grown at nearly twice the rate – with a 40% compound annual growth rate – since June 2014 compared to -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 example, mobile gaming spending growth was consistently higher than non-gaming spending. Then gaming spending spiked again at the start of the COVID-19 pandemic. But by the end of 2020, non-gaming growth had caught up and the gap widened in 2021.

Image Credits: Sensor tower

While non-gamers are enjoying their newfound dominance, it wasn’t great news for the app economy last quarter. The report also found that overall app spending in the US fell for the first time in the second quarter after falling from the surge generated by the pandemic.

At the start of the pandemic (around April 2020), annual growth in consumer spending had jumped from around 20%-30% in 2019 to 35%-55% over the next 12 months. But in May 2022, US spending declined for the first time as consumers began shifting their dollars back to other non-mobile activities, such as dining out and travel.

Despite this drop from pandemic peaks, consumer spending in the second quarter of 2022 was still up 71% from the second quarter of 2019.

In other key findings from the quarter, summer travel drove travel app downloads to record highs in the US and UK, and airline app downloads in those markets were up 30%+ compared to Q2 2019 before the pandemic .

Meanwhile, the top five ticketing apps saw 10 million downloads, up 70% from the second quarter of 2019, as users returned to concerts, sports games and other events.

Image Credits: Sensor tower

Global app downloads also slowed in the quarter, as installs totaled 35 billion in the second quarter, down 2.5% year over year. App Store downloads fell 1.3% to 7.8 billion, and Google Play installs fell 3% to 27.2 billion.

The most downloaded non-game app globally was TikTok, holding the top position eight times out of the last 10 quarters. It is 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 — the highest number since 2014 and following the acquisition of game maker Sybo 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 is still the largest contributor to iOS game revenue, despite the game approval pause in May 2022. In the second quarter, 65% of user spending in the Chinese App Store was on mobile games, while 35% was for non-game apps in the second quarter of 2022—percentages that were unchanged from a year ago in June 2021. The Japanese App Store still generated the third largest revenue from iOS games and maintained that position, though gaming’s share shrank slightly to 68% of total spending, down from 70% in June 2021.

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