Mobile apps on path to reach $70 billion in annual revenue by 2017

PanARMENIAN.Net - Mobile apps are on a path to reach $70 billion in annual revenue by 2017. And while games drive the majority of app revenue now, they won’t stay on top of the heap much longer, Venture Beat said.

Digi-Capital, an investment bank for mobile apps and games, said in its first quarter mobile apps study that non-game apps could double their percentage share of total app revenue from 26 percent to 51 percent by 2017, thanks to a 61.3-percent compound annual growth rate from 2013 to 2017.

Meanwhile, mobile app investment is gathering steam. It has doubled across categories since the third quarter of 2013, with $10 billion invested in the last 12 months.

Mobile app mergers and acquisitions accounted for a record $35 billion in the last 12 months, not including Facebook’s $16 billion acquisition of WhatsApp. In the first quarter of 2014, mobile app M&A was $7 billion, or twice the number from a year ago. The acquisitions are split between strategies aimed at growth, consolidation, and defensive moves.

Free apps with in-app purchases account for more than 90 percent of revenue, but that’s not the case in all app categories. In-app purchases have worked most effectively for monetizing games, accounting for 40 percent of downloads and 74 percent of revenues. But in-app purchases are less effective outside of games, accounting for 60 percent of downloads and only 26 percent of revenue for non-game apps.

The new development is the adoption of the “app-as-a-service” model, which is similar to the software-as-a-service model in other industries.