The next five years are shaping up to be a period of tremendous growth for the global mobile app market, according to forecasts from Sensor Tower. However, game apps may face an uphill battle to stay on top.
Total installs of mobile apps worldwide are projected to surge to 189 billion by 202 resulting in an 8.4% annual increase from 2021 levels, the report states. Revenue is expected to grow at the same 8.4% compound rate, ballooning from $124 billion last year to $186 billion five years from now.
Both the Apple App Store and Google Play Store will contribute to this growth. However, user spending in the App Store is expected to double the amount spent by consumers on Google’s marketplace, raking in an estimated $125 billion compared to $60 billion its rival is expected to bring in.
Despite this forecasted growth, one category stands to lose some of its outsized influence: games. Currently accounting for 54% of app revenue, the games segment is expected to capture a smaller 47% share by 2027 as entertainment while photo/video apps are forecasted to gain further ground.
India Will Keep Leading in Downloads but the US Generates the Most Money
Fast growth in India and Brazil could reshape the global market landscape. India is poised to retain its crown as the world leader in app installs, potentially surpassing 38 billion by 2027.
Meanwhile, Brazil may dethrone the U.S. as the No.2 market as soon as 2024—propelled by rising smartphone ownership and improved connectivity. In contrast, challenges in American games and entertainment could result in a meager 0.6% annual revenue growth through 2027.
The North American market, which accounts for nearly 37% of the global mobile market billings, will grow at a fast pace within the next five years as revenues from this region are expected to climb by 63.5%. Asia’s total revenues are expected to account for 41% of the total and will grow by 34.6% during this same period.
Also read: 77% of Mobile Game Players Make an In-App Purchase Within the 2 Weeks of Downloading
The biggest European markets like Germany, the U.K., and France are positioned for double-digit annual consumer spending growth through 2027, indicating that developers targeting those regions may thrive.
Consumers are expected to pour over $5 billion in Germany on mobile apps and a similar outlook was drafted by Sensor Tower’s analysts for the U.K. Meanwhile, France and Switzerland stand in third and fourth position in terms of spending with consumers being expected to disburse $3.1 and $2.8 billion five years from now.
In Asia, China continues to lead the scoreboard with consumer spending jumping to nearly $35 billion resulting in a 51% jump compared to 2022 figures. Japan, South Korea, and Taiwan are the closest contenders but they remain heavily distanced as their markets are much smaller.
AI and Entertainment Apps Are Expected to Attract Further Interest in the Mobile Ecosystem
Non-gaming categories will experience significant growth in the next five years amid the rise of artificial intelligence (AI) and entertainment apps.
The ascent of AI-powered productivity apps signifies a favorable ecosystem for developers catering to consumers demanding more efficient tools. Moreover, the surging popularity of VPN apps, focused on security and privacy, also points to a growing market for publishers in that niche.
Meanwhile, entertainment apps like TikTok and YouTube are expected to account for a larger percentage of global user spending on the Apple App Store, moving from 8% in 2021 to 13% by the end of 2027.
A similar trend, but less aggressive, is forecasted to occur on Google’s Play Store, as social apps are expected to account for 7% of global revenues in 2027 compared to 4% they currently attract.
Sensor Tower’s data paints a mostly bullish picture for the next five years. Yet the growth will be uneven. Strength in India, Brazil, and Europe contrasts with challenges hampering the U.S. Meanwhile, shifting consumer interests away from games and towards entertainment and productivity apps open doors for the right developers.
The report provides a mixed outlook. Growth opportunities abound but appear to be unevenly distributed. Developers able to adapt strategies for selective regions and non-game segments stand to benefit the most.