Revenue generated through Apple’s App Store will increasingly be linked to subscriptions.
According to new numbers from Strategy Analytics, new devices like the refreshed Apple TV and Apple Watch will extend app capabilities enhancing the value of subscriptions beyond entertainment.
When the App Store initially launched back in 2008 developers largely generated revenue from single downloads. Today, nearly 80 percent of revenue is generated by the sale of virtual goods and in-app purchases, but subscriptions are the next big trend.
“The popularity of the App Store, which will see more than 300B apps downloaded between 2008 and 2021, offers an important channel for companies seeking to reach new users, upsell existing users and extend reach internationally,” wrote Strategy Analytics in a release. “Already Health & Fitness, News and Productivity apps are finding success with subscription offerings. Apple will also be buoyed by the new Apple TV and Apple Watch which will account for a small percentage of downloads but will be useful in extending the value of subscriptions.”
Strategy Analytics now expects revenue from subscriptions to grow from 3 percent to 20 percent of iOS app revenue by 2021.
According to Joshua Martin, chief evangelist of Apps Research at Strategy Analytics, Netflix lead the charge as it became one of the highest grossing entertainment apps within just days of enabling in-app sign-ups.
“Simply by enabling a feature Netflix found a new universe of users,” Martin wrote. “The stickiness of subscription services such as Netflix and its contemporaries will see content owners sit atop the highest grossing entertainment apps and longer term amongst the highest grossing apps overall globally. Other revenue streams remain strong – in-app purchase will still drive billions in revenue each year throughout our forecast – but the growth of subscription and consolidation among key players is a key trend that will drive future growth for the App Store, Apple, and content owners.”