App Annie Index – Market Q3 2013: BRIC Countries Emerging as App Store Superpowers

Q3 Market Header

Google Play Downloads 25% Higher Than iOS App Store Downloads in Q3 2013, But iOS Still Generates Over Twice as Much Revenue

Welcome to the App Annie Market Index, where at the end of each quarter we review the latest download and revenue insights by stores, countries and categories. In addition to our monthly Games and Apps Indexes, the Market Index provides you with a macro view of the trends based on market data from App Annie Intelligence, helping you identify where to look for the most fertile investment opportunities in the app stores.

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The Store Index

South America Extends Google Play’s Download Lead as Revenue Gap Narrows

Country Index iOS/GP Comparison

Google Play led the iOS App Store in downloads by about 10% in Q2 2013 and Google Play has since expanded that lead to about 25% in Q3 2013. Worldwide iOS App Store downloads were driven by strong growth in China and Russia, but Google Play was still able to grow at a stronger rate from Q2 2013 to Q3 2013. The increase in Google Play’s downloads was primarily driven by Brazil and Argentina with the former climbing one spot in the rankings to #4 behind the US, South Korea and India. Games remained the leading category in Brazil, but gains made by the Communication and Media & Audio categories also helped them achieve their Google Play download ranking.

Home to the world’s 5th largest population, Brazil’s middle class has grown to account for over 50% of that population according to a report by The World Bank. The growth of the Brazilian middle class is driving the country’s shift from feature phones to smartphones with IDC predicting that the country’s yearly smartphone shipments will increase over 125% between 2013 and 2017, compared to just a 65% average increase globally. To prepare for this shift, Brazil’s telecoms invested a record $12.5 billion USD in 2012 to expand their networks, increase coverage and improve service quality. Additionally, Brazil’s government passed a tax stimulus in February 2013 designed to spur $9 billion in infrastructure development to support 3G/4G networks. Brazil’s ascension on the international stage has made them a market to track closely and their growth is already having a major impact on Google Play.

While Google Play extended their lead in total downloads, they are still trying to catch up to the iOS App Store when it comes to revenue generation. The growth in iOS App Store revenue that helped them maintain their lead was primarily driven by the Social Networking and Navigation categories, while Google Play’s revenue growth was driven by Games. Although the iOS App Store generated about 2.1x the app revenue of Google Play in Q3 2013, their lead has shrunk since Q2 2013 when their revenue was about 2.3x higher.

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The Country Index

China Joins US and Japan at Top of the iOS App Store Rankings

iOS App Store: Top Countries in Q3 2013
Downloads Revenue
Rank Country Rank Change
vs. Q2 2013
1 United States -
2 China -
3 Japan -
4 United Kingdom -
5 Russia -
Rank Country Rank Change
vs. Q2 2013
1 United States -
2 Japan -
3 China 2
4 United Kingdom 1
5 Australia 1

SOURCE: App Annie Index ™

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China moved up two spots to become the third highest grossing country on the iOS App Store. This move in the revenue rankings made the United States, China, and Japan the top three countries by both downloads and revenue on the iOS App Store in Q3 2013. The US and China combined to make up over 40% of worldwide iOS App Store downloads, while the US, Japan, and China accounted for about half of the iOS App Store’s revenue.

The Q2 2013 Market Index found that Google Play was gaining traction in the emerging markets of Brazil, Russia, and India, but they aren’t the only players in BRIC countries. China was a primary driver of both download and revenue growth on the iOS App Store from Q2 2013 to Q3 2013. With a population of over 1.3 billion people and the world’s fastest-growing economy according to the IMF’s World Economic Outlook, China leads the world with over 1.1 billion mobile subscription accounts. Only about 293 million of those subscriptions have access to a 3G network, but IHS’s iSuppli research group forecasted that China will spend about $6.3 billion to expand their LTE networks in 2014. Apple made it clear that they are targeting the Chinese market when they eschewed their normal three-month delay and launched the iPhone 5s and 5c on the same day as the US and other major markets. Although they have not released sales figures for individual countries, Apple had a record-setting weekend where they sold over nine million of their highly anticipated handsets in the first three days that they were available. An influx of new iPhones in China could cement the growth they have made so far in 2013 and may pave the way for even stronger growth in 2014.

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Taiwan Helps Asia-Pacific Dominate Google Play Revenue Rankings

Google Play: Top Countries in Q3 2013
Downloads Revenue
Rank Country Rank Change
vs. Q2 2013
1 United States -
2 South Korea -
3 India -
4 Brazil 1
5 Russia 1
Rank Country Rank Change
vs. Q2 2013
1 Japan -
2 South Korea -
3 United States -
4 Germany -
5 Taiwan 3

SOURCE: App Annie Index ™

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Taiwan climbed three spots to become the #5 country by revenue generation on Google Play for Q3 2013. With Japan and South Korea holding down the #1 and #2 rankings respectively, Taiwan’s growth gave Asia-Pacific three of the Top 5 revenue generating countries on Google Play. The Gaming category primarily drove Taiwan’s revenue growth and accounted for over 80% of their Google Play revenue, which was on par with the worldwide average in Q3 2013. Another factor that helped support their rise in the rankings was the prevalence of 3G networks in the country. According to figures from Taiwan’s National Communications Commission, almost 82% of their 28 million mobile subscriptions were on a 3G network, which is more than double the worldwide average of about 30% identified by research from the mobile trade association, GSMA.

What’s even more impressive about Taiwan’s movement in the revenue rankings is that Google removed paid apps from Google Play for 18 months before reinstating them in late February 2013. The Taiwanese government issued a complaint that app stores were not abiding by their consumer protection law that gave users a seven day refund window. In response to the complaint, Google removed their paid apps and filed an appeal to keep their 15-minute return policy on mobile apps. Google eventually won the case and was allowed to handle their return policy as they saw fit after paying a fine that amounted to about $34,000 USD. In less than half a year since the reinstatement of paid apps on Google Play, Taiwan generated enough app revenue to join the Top 5 countries by Google Play revenue in Q3 2013.

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The Category Index

Games Continue to Dominate While iOS App Store Users Educate Themselves

iOS App Store: Top Categories in Q3 2013
Downloads Revenue
Rank Category Rank Change
vs. Q2 2013
1 Games -
2 Entertainment -
3 Photo & Video -
4 Utilities 1
5 Lifestyle 1
Rank Category Rank Change
vs. Q2 2013
1 Games -
2 Social Networking -
3 Music -
4 Productivity -
5 Education 1

SOURCE: App Annie Index ™

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Google Play: Top Categories in Q3 2013
Downloads Revenue
Rank Category Rank Change
vs. Q2 2013
1 Games -
2 Communication -
3 Tools -
4 Entertainment -
5 Social -
Rank Category Rank Change
vs. Q2 2013
1 Games -
2 Communication -
3 Social -
4 Travel & Local -
5 Tools -

SOURCE: App Annie Index ™

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The Games category continued to account for about 40% of downloads on both the iOS App Store and Google Play. While games accounted for the largest share of downloads on Google Play, the categories that helped extend their lead over the iOS App Store were Media & Video, Social, and Communication. Despite losing ground to Google Play’s growth in downloads, the iOS App Store’s downloads grew from Q2 2013 to Q3 2013 on the back of strong performances in the Education, Utilities, and Photo & Video categories.

The Games category also continued to lead both app stores in revenue and was the primary driver that helped Google Play narrow the revenue gap with the iOS App Store in Q3 2013. Games continued to account for about 80% of Google Play’s revenue, but the share of iOS App Store revenue attributable to the Games category fell slightly from about 75% in Q2 2013 to about 70% in Q3 2013 due to gains made in the Navigation and Social Networking categories.

The Education category climbed into the Top 5 grossing categories on the iOS App Store in Q3 2013, echoing a number of education trends identified in earlier App Annie Index reports. The July Apps Index saw Chinese educational app publisher Bin Wang join the Top Publishers on the iOS App Store by monthly downloads while the August Games Index identified a trend where puzzle and trivia games accounted for half of the Top 10 iOS App Store games by monthly downloads. A study by Grunwald Associates found that parents in the US have begun embracing the educational potential of mobile apps. Over three-quarters of parents agreed that mobile devices and apps can make learning fun, teach basic technology skills, and promote curiosity. When asked about the mobile apps and content their kids consume, parents of kids pre-K to 12th grade said 69% of the content was “purely entertainment” while 31% had “some educational value.” Considering the children’s game publisher trend identified in the July Games Index, it wouldn’t be surprising to see publishers address this gap by developing apps and games that provide more substantial educational value for children.

To get an update on the top apps on the iOS App Store and Google Play for September 2013, please be sure to check out App Annie’s latest Games Index and Apps Index.

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Notes:

  • App store metrics reported in this article are based on data from App Annie Intelligence. As footnoted in earlier App Annie Index reports, market-level metrics up through Q1 2013 represented the aggregation of countries that were measured by App Annie Intelligence during that data period. Effective with the Q2 2013 App Annie Index, market-level metrics represent the full worldwide geography for both iOS and Google Play.
  • App Annie Intelligence is currently available for the iOS App Store and Google Play. It does not currently provide estimates for other app stores, such as the Amazon Appstore. While in many countries, iOS and Google Play represent a significant portion of the app market, that is not the case for some countries. For example, China has a number of sizable third-party Android app stores.
  • App Annie Intelligence revenue estimates reflect app store revenue earned from paid downloads and in-app purchases. They do not include revenue earned from in-app advertising.
  • App Annie Intelligence revenue estimates represent the net revenue that the publishers earned from the app store; they exclude the fees taken out by Apple and Google. Currently, iOS App Store and Google Play each take a 30% cut.
  • The Indexed Downloads metric provides an easy way of comparing different downloads numbers against each other. For example, if Q4 2012 has Indexed Downloads of 100 and Q1 2013 has Indexed Downloads of 200, then Q1 2013 downloads are 200/100=2 times as high as Q4 2012 downloads. If Q1 2013 has Indexed Downloads of 80, then Q1 2013 downloads are 80/100=80% of Q4 2012 downloads. The same applies to the Indexed Revenue metric.
  • In the iOS App Store, a publisher categorizes their app under a Primary Category as well as an optional Secondary Category. All category analysis in the App Annie Index has been conducted based on the app’s Primary Category only. This approach prevents any overlap or duplication among categories, and therefore allows us to size the categories and analyze category share changes properly. It also allows us to identify the true category growth even if apps are increasingly added to secondary categories on a macro basis.
  • On Google Play, an app can be categorized under only one category, so there is no overlap across categories.
  • In both the iOS App Store and Google Play, a publisher may decide to shift its own existing app from one Primary Category to another Primary Category. This potentially may cause a trend break in the app store’s category data, depending on the download or revenue volume associated with the recategorized app(s).

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  • Jitesh Nunnan

    The “BRIC” countries now also include South Africa, as such the acronym has changed to “BRICS”. In any regard are there any stats on the South African market?

  • Ray Lee

    “The Education category climbed into the Top 5 grossing categories on the iOS App Store in Q3 2013″. But I could not find it on the 2013 Q3 top revenue category table. Why?

    • http://www.appannie.com/ App Annie

      Ray,

      We had an error in our table, and it’s been fixed. The 4th chart (iOS App Store: Top Categories in Q3 2013) should now include Education at #5 in revenue.

      Thanks for bringing this to our attention!

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