Underestimating The App Industry And Its Predicted Revenues Is Not A Sound Business Plan

April 2, 2015 - Written By John Anon

If you are still under any illusion that the future is not in apps, then you should seriously consider the way in which the app business is currently growing and predicted to continue to grow. Over recent times, many media industries have been seeing a transitional period occur, in which new ways to monetize from the industry have needed to be identified. Those that do not adapt to this transition have typically seen straight out decline while even those that do transition have still seen some element of decline. The music industry is a prime example of such an industry. What was once of the biggest grossing media industries, has significantly seen its revenues fall in recent years. This is in spite of the industry also making the necessary transitional changes, like converting to digital, turning to streaming, subscriptions and a pay-as-you-go platform. In fact, according to the figures from recent reports (source link below), music revenues totalled $15 billion by the end of 2013. Likewise, once the 2014 figures are declared they are likely to have fallen again. Further still, it will be likely they will be falling again next year too.

However, app revenues are totally different. In fact by 2018, it is projected that revenues for the app industry will exceed $34 billion. That is, over double what the current revenue is for the music industry, which as already noted, seems to be declining year-on-year. In fact, the only media industry which is accredited with likely to be higher than the app industry by 2018, is the movie industry which is predicted to reach $46 billion. However, the movie industry currently brings in an annually reported figure of around $40 billion, which means the growth between now and 2018 is only expected to be in the region of $6 billion. That is far below the predictions being made and offered for the app industry. Which is seeing its growth effectively double year-on-year.

It is also worth pointing out that these figures are based on extremely conservative expectations of the app industry and its likely level of revenue. For instance, the figures solely represent what the iOS and android app revenues are predicted to generate from the Apple Store and Play Store alone. These figures do not take into consideration any third party app stores already existing and those emerging in foreign markets, like China. Not to mention, these figures also only represent the at the point-of-sale figures for apps. To be clear, the figures are only based on what the apps are likely to generate from sales alone. They do not take into consideration the already highly lucrative app monetization models which are generated from in-app advertising and the likes. As such, the figures predicted for app revenues going forward are not only conservative, but probably far better understood as grossly below what the level of revenue is likely to be, come 2018.