Store Index: How To Read The Chart
We’re glad to see all the interest and attention we’ve had for our first App Annie Index report. Our objective is to inform business decisions and create constructive discussion in the industry, so we’re happy to engage with all those who read our reports and offer more analysis, insight and advice.
We’ve had some good questions from readers about the figures we released for iOS revenue growth and we’d like to clarify how best to interpret these figures.
How To Interpret The “Store Index: Revenues”?
The key findings from this chart are as follows:
- When comparing monthly revenues for the month of October 2012, iOS worldwide revenues were four times larger than those of Google Play.
- iOS’s October 2012 monthly revenues were 12.9% higher than their monthly revenues in January 2012.
- Google Play’s October 2012 monthly revenues were 311% higher than their monthly revenues in January 2012.
This does suggest very impressive growth for Google Play during the first ten months of 2012. However it is important to keep note of the following:
- We are comparing two single months of the year. We are not compounding growth across these months.
- This is not a year-over-year comparison.
- Seasonality factors (device launches, seasonal events, etc.) are in play and do cause month-to-month fluctuations.
We’d like to take you through our analysis and also demonstrate how it is consistent with Apple’s own earnings announcements, which we constantly monitor.
The difference between cumulative and monthly publisher revenues
The first thing to note is that Apple’s public earnings and developer conference announcements about App Store publisher payments (the 70% of App Store sales they pay out to app publishers) are calculated cumulatively across the lifetime of the store. In other words, their announcements include all payments from Apple to publishers generated by the App Store from its inception to the date of the announcement. This shows the growth in the total scale of the App Store to date.
For the App Annie Index, we report on monthly revenues (i.e. monthly App Store payments to publishers) so that you can see changes in revenue trends over time on a monthly basis.
So what were the revenue trends in the App Store according to Apple’s figures?
To verify the accuracy of our App Annie Intelligence market estimates, we regularly calculate from Apple’s own earnings and developer conference announcements their estimated monthly revenues.
Please note that App Annie Intelligence estimates are generated from an advanced statistical model that leverages billions of app datapoints that App Annie tracks. This is created independently of Apple’s earnings announcements.
We’d like to take you through how we do this for 2011 and 2012.
Apple’s App Store revenue announcements
Since the App Store launched, Apple has periodically made announcements of cumulative publisher revenues for the iOS App Store. And they’ve made one announcement for quarterly revenue too. We’ve listed them here below:
See the footnote for details of these Apple announcements
For example $2.0B in March 2011 means from the launch of the App Store in June 2008 through the end of March 2011, Apple had paid $2.0B to app publishers.
We’ve graphed all of these revenue announcements below and used linear interpolation to map cumulative growth.
Interpolating monthly revenues from Apple’s cumulative revenue announcements
In the App Annie Index, we reported that according to App Annie Intelligence estimates, iOS publisher revenues for the month of October 2012 were 12.9% higher than in January 2012.
i) Calculating January 2012 revenues = $300 million
In the chart below we extrapolate from Apple’s revenue announcements to verify the accuracy of these market estimates.
- Apple announced that App Store cumulative revenues were $3 billion from June 2008 to September 2011 and increased to $4 billion from June 2008 to January 2012.
- From this we can calculate that revenues for the months of October 2011 to January 2012 inclusive were $1 billion ($4 billion minus $3 billion)
- Apple also announced that revenues for the months of October 2011 to December 2011 inclusive were $700 million.
- From all of this we can then calculate that January 2012 revenues were $300 million ($1 billion minus $700 million)
ii) Calculating October 2012 revenues = $333 million
For all the months after January in 2012, we use linear interpolation on Apple’s announced figures. Since Apple announced cumulative revenues of $5.5 billion from June 2008 through July 2012, and $6.5 billion from June 2008 through October 2012, we deduct that the three months of August through October 2012 saw $1 billion in publisher revenues. Through linear interpolation, we have approximated October 2012 revenues to be $333 million.
iii) Calculating February 2012 through July 2012 monthly revenues
During the six months from February to July 2012, we can calculate Apple paid out $1.5 billion ($5.5 billion minus $4 billion). This approximates through linear interpolation to $250 million per month.
iv) Putting it all together for 2012
This is the resulting table showing the monthly interpolated revenues for 2012.
v) Calculating the % difference between the monthly revenues of October 2012 and January 2012
With these approximations in hand, we can see that monthly publisher revenues for October 2012 ($333 million) are 11% greater than for January 2012 ($300 million): [$333m - $300m] / $300m = 11%. This approximation compares favorably to our statement in the App Annie Index where we reported that October 2012 publisher revenues were 12.9% greater than January 2012.
Interpolating year-over-year revenue growth of 2012 vs 2011 in the iOS App Store
i) Following the same process as above we have interpolated monthly revenues from May 2010.
ii) Let’s compare the same period of 2011 vs 2012. For this calculation we use January through October inclusive for both years as we don’t yet have public figures for November and December 2012.
The sum of all monthly payments from January 2011 up to October 2011 is $1.5B. The sum of all monthly payments from January 2012 up to October 2012 is $2.8B.
Therefore, we can calculate the 2012-2011 year over year growth rate (excluding November and December) as ($2.8B – $1.5B) / $1.5B = 92%.
So if you compare the 12.9% growth between January 2012 and October 2012 monthly revenues and the 90% growth year-over-year for January-October 2011 and January-October 2012, they are not mutually exclusive. They are rather two different sides of the same story. That story is that App Store revenues ramped up towards the end of 2011, but have not grown as quickly from the month of January to the month of October 2012.
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This is a lot of data to digest here, so if you have any questions about this, simply ask us in the Disqus comments box below or email us at firstname.lastname@example.org.
“…we were very pleased to report that we have reached $6.5 billion in cumulative payments to developers.”
“…we have surpassed $5.5 billion in payment to developers.”
“…by the end of this month, our developers will have earned over $4 billion cumulatively from App Store sales,..”
“…we’ve paid over $2.5 billion to developers…”
“…Jobs boasted that the company has paid out $2 billion to developers…”
“Apple says App Store has made developers over $1 billion”