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Mobile App Store Spending Topped $100 Billion in 2018

Consumers spent over $100 billion downloading software and paying for services from mobile marketplaces, Apple’s app store, and the Google Play app store in 2018.

That’s according to new research released on Wednesday by the mobile analytics firm App Annie. The $100 billion milestone is a 75% percent increase from 2016, and includes in-app purchases and in-app subscriptions.

Additionally, people spent about three hours daily in 2018 interacting in some way with a mobile app, which App Annie executive vice president of market insights Danielle Levitas said was up from two-and-a-half hours during the previous year. She said that mobile apps continue to offer an increasing amount of “value and convenience” to users as exemplified by finance apps that let people check their bank accounts on their smartphones and entertainment apps like YouTube.

Two years ago, major companies including Starbucks were merely experimenting with smartphone apps to let people do things like order coffee and pay it, Levitas explained. Today, however, she said more companies are creating compelling mobile apps.

“It’s becoming a critical platform,” Levitas said about mobile apps. “We’re using these devices and the apps on them even more [than previous years].”

YouTube is the most popular video streaming service except in China, where Tencent Video dominates, according to the report. Meanwhile, Netflix was the top video streaming app in “nearly every country” by consumer spending, although the report did not cite a specific dollar figure. Analytics firm Sensor Tower has previously estimated that Netflix made about $790.2 million in sales via Apple’s App Store in 2018 during a 12-month period period that ended Nov. 30, making Netflix the world’s highest grossing iOS app.

Earlier this January, Netflix decided it would change how people could subscribe to its service by redirecting iOS users to its own website instead of letting people subscribe within Apple’s App Store. The company wanted to avoid the 30% cut that Apple takes from each purchase made via the company’s app store. Netflix made a similar decision in May regarding the Google Play app store to bypass its 30% fee.

Similar to Netflix, Epic Games, which makes the popular Fortnite multiplayer video game, debuted its own app store in late 2018 that is intended to distribute games and escape the 30% commission that Google and Apple charge.

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App Annie CEO Ted Krantz said that companies like Netflix and Epic Games were likely thinking, “Why am I passing that money off we can do it ourselves.” While the app store market is now a “bit of a Wild West,” he says about the app store defectors that “those are really rare anomalies.”

There are only a “handful” of companies that are popular enough to bypass Apple and Google’s app stores, Krantz explains. Leaving Apple’s app store presents its own set of problems, he says, because consumers generally trust Apple’s security.

Despite its series of data privacy mishaps in 2018, Facebook remains the top app in terms of monthly active U.S. users, although App Annie didn’t cite a specific number. However, App Annie noted that in September, the Facebook-owned WhatsApp messaging app “dethroned” Facebook in terms of global monthly active users.

Levitas attributed WhatsApp’s rising popularity to its simple way of letting people send messages to each other worldwide without dealing with the hassle of cellular contracts.

As for Facebook, Levitas likened the company’s past year to Uber’s tumultuous 2017 in which people on social media urged others to “delete Uber” in retaliation for that company’s problems under then-CEO Travis Kalanick. Ultimately, the social media crusade petered out without causing mass defections.

Facebook’s challenge is that new problems continue to emerge and tarnish its reputation even further.

If Facebook keeps having bad press, “at some point it will hurt engagement,” Levitas said. But she added that any drop in user growth in the U.S. would likely be offset by growth overseas.