In brief
The article attributes Google Play’s lower revenue to differences in user purchasing power and spending habits, greater complexity in app development and operations, and more widespread piracy. In the third quarter of 2018, the App Store earned about US$12 billion versus Google Play’s US$6.2 billion, while subscription models offered more stable long-term revenue.
You have probably heard that, even though mobile apps are part of everyday life, Apple’s App Store consistently generates more revenue than Android’s Google Play. Now, that gap has reached a new high.
In the third quarter of 2018, the two major app stores generated a combined US$18.2 billion in revenue. However, App Store revenue exceeded Google Play’s by 93.5%, marking the widest quarterly gap between the two platforms since 2014.
With 2.3 billion active Android devices worldwide and a market share of more than 75%, Android has an overwhelming advantage in sheer volume. Why has it still been unable to turn the situation around?
Why does Google Play struggle to monetize its enormous app download volume?
In the third quarter of 2018, the App Store generated approximately US$12 billion in revenue, compared with Google Play’s US$6.2 billion—nearly twice as much. Yet another metric, app installations and downloads, tells the opposite story: the App Store recorded 7.6 billion downloads, while Google Play reached 19.5 billion, roughly 2.5 times as many.
Why is Google Play unable to translate its substantial download volume into revenue, with the gap between it and the App Store continuing to widen? The first key reason is the difference in purchasing power and spending habits between iOS and Android users.
Market research firms noted that prices for new iPhones in 2018 were higher than expected, with the overall average selling price reaching US$745. By contrast, IDC estimated that the average selling price of Android phones would reach US$262 that year, meaning the price of one iPhone could buy about three Android phones. Android sales were also dominated by low- and mid-range models, with a substantial share coming from Southeast Asian markets where consumers had more limited financial resources. Looking at users’ spending power overall, iOS users naturally had considerably greater purchasing power and a stronger willingness to spend money on apps.
The second reason is that the complexity of operating apps affects app quality。
The only devices running iOS are iPhones and iPads. With relatively few system and device variants, developers have fewer screen sizes to accommodate and no special specifications to consider, making app optimization and management relatively straightforward. Android, however, requires developers to design and operate apps across a wide range of brands and thousands of specifications, making the process far more complex. As a result, the App Store has relatively more high-quality, major titles, and consumers are naturally more willing to pay for better apps.
The final reason is the openness of the operating system, which makes piracy more widespread on Android.
iOS is much more closed than Android, which places more restrictions on app development and lengthens the review process. The wait for an app to become available is often at least two weeks longer than on Android, but this also means that pirated apps are relatively less common on iOS. Although a paid app generally costs around 60 dollars at the time of writing, many free, cracked or copied versions remain available for Android, causing Google Play to lose a considerable amount of revenue it would otherwise receive.
Netflix generates the most revenue, while the App Store encourages developers to adopt subscriptions
Another point deserves attention: which app generates the most revenue for the two platforms? Among non-gaming apps, the answer is Netflix, which generated US$243.7 million for them. As Netflix’s paid subscription model became a major success, other app platforms offering content began adopting the same business model. Apple also appears to be encouraging developers to make this transition.
The previous year, Apple encouraged developers to shift their App Store pricing from one-time purchases to long-term subscriptions, offering favorable terms to attract them. For subscription-based apps, Apple takes 30% of developers’ revenue in the first year, reducing its share to 15% in the second year. Overall, this brings more stable, long-term revenue to both developers and Apple, while encouraging developers to pay greater attention to ongoing app maintenance.
For consumers, however, a one-time purchase is cheaper than a subscription for inexpensive apps. Whether paid subscriptions will become the next mainstream model for apps or content services remains to be seen.
Original article URL: https://goo.gl/XjqVwQ