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Mobile apps poised to hit $70B in revenues by 2017

By on December 3, 2014

image2Mobile apps are projected to reach $70 billion in annual revenue by 2017. Games are currently leading the pack but that may change going forward.

Digi-Capital, the investment bank, said in its mobile apps study that utility and other non-game apps could more than double their percentage share of total app revenue from 26 percent to 51 percent by 2017, thanks to an impressive 61.3-percent compounded annual growth rate over the last few years.

Digi-Capital tracks huge mobile apps growth.

Graph: Digi-Capital keep track of growth in the mobile space

Mobile media usage continues to grow — in fact, it grew five times in four years to approximately 20 percent of media consumption last year. From 2009 to 2013, the annual growth rate for mobile apps was roughly 50 percent.

The freemium model for in-app purchases represents 90% of the revenue, and it appears the in-app purchase model works best for monetizing games. These types of apps accounted for 40 percent of downloads (concentrated around a handful of games), driving 74 percent of the revenue.  Freemium/in-app purchases are not as effective outside of gaming, however — they represented 60 percent of non-game downloads but only 26 percent of revenue for non-game apps.

For marketers, the dominance of in-app purchases as a monetization platform means less opportunity to tap into in-app advertising opportunities. As a result, native advertising on social platforms will probably remain the dominant advertising opportunity in the short term. Furthermore, with the success and consolidation in the app market, it will be harder for entrants to get above the noise as these winners pour their massive daily profits into advertising their games.

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