Mobile users now spend 80 percent of their time in just five apps, according to 2015 data from Forrester. “It’s just too inconvenient for consumers to hop in and out of so many apps,” Julia Ask, an expert in mobile commerce at Forrester said. “So consumers are consolidating where they spend their time. There’s now a much bigger bar to get over if you’re going to build an app.”
In the first year after we started Episode 1 in late 2013 we received a lot of pitch decks for mobile apps, both consumer and enterprise. This was the era of the iPhone 5 – feels like a long time ago now. The mobile app economy was well into its massive growth phase, helped by the larger 4 inch screen of the iPhone 5 and the introduction of the concept of in-app purchases (as opposed to in app advertising, the growth of which began to decline around then). 2013 saw $10B revenues for the Apple App Store. That figure was $20B for the last full year, 2015. That’s just under 50% of the total mobile app economy ($45B 2015), such is the dominance of Apple in the industry. Forecasts show strong growth over the coming years.
It’s a massive business. But it is dominated by free apps (8 of the top 10 which of course earn big bucks advertising – 90% of app store revenue in 2013), gaming (30% of total paid-for app revenues) and a small handful of heavily used mega-apps. Spotify takes top spot (of non-gaming revenue earners based on their premium customers) and Line number 2 (and 6 & 7 with Line Manga and Line Play respectivley – both focus on the Japanese market so don’t be embarrassed if you hadn’t heard of them). Of the free apps Facebook’s Messenger, Facebook and Instagram take the top 3 slots amazingly. YouTube is at 4 and Pandora, for now, is 5.
What does this mean to us at Episode 1? We don’t really pay much attention to pure consumer app businesses. Of our consumer facing businesses, only SimplyCook has an app as of today, but it is a complement to its business, not the driver. I believe that consumer mobile app focused businesses can thrive within large niches of regular users (like SimplyCook which may well become mobile first in the future), but to build a mass adoption consumer facing mobile app is a near impossiblity. It will happen again, but the chances of us picking that winner is so slim that we focus our attention elsewhere.
Because of the app consumer market segment saturation, the Enterprise segment will likely be a driver behind the app revenue growth in the coming years, and certainly gets a lot more attention from Episode 1. We have invested in Attest which connects enterprises with consumers to conduct rapid market research, in TouchSurgery which is revolutionising the training of surgeons, and in AimBrain which is leading advance in biometric access to devices. Both Apple and Google heavily invest into R&D and popularization of IoT among app developers – another space we watch closely.
Come our way if you’re an enterprise mobile business operating in a large market. If you’re trying to build competitor to any of the top ten free apps, no thanks.
Our newsletter is only for the people that want to be seen. If you want to get all the latest tips, tricks, news and updates from Episode 1 then this is the newsletter to be subscribed to. See you in your inbox.