The app economy is going from strength to strength

The latest report published by App Annie showed mobile apps had their best year in 2018, and will get better in 2019.

In the report titled “The State of Mobile in 2019 – The Most Important Trends to Know”, the mobile apps analytics firm App Annie showed the latest data of the mobile apps industry, as well as their projections for the near future.

In short, the apps industry is doing rather well. “Consumers spent $101 billion on apps globally in 2018. This is larger than the global live and recorded music industry, double the size of the global sneaker market, and nearly three times the size of the oral care industry,” said Danielle Levitas, EVP, Global Marketing & Insights, App Annie. “Mobile experiences are so central to how we live, work and play and with consumers spending 3 hours a day on mobile, it’s clear how vital this platform is for all businesses in 2019 and beyond.”

Here is a snapshot of the highlights:

App Annie 2019 Snapshot

A few additional data points also caught our eyes:

  • Consumers on average spent 50% more time in mobile apps in 2018 than they did in 2016. Social and Communications apps made up 50% of total time spent globally in apps in 2018, followed by Video Players and Editors (15%) and Games (10%);
  • In Indonesia, mobile users spent over 4 hours a day in apps — 17% of users’ entire day. In mature markets like the US and Canada, the average user spent nearly 3 hours a day in mobile apps in 2018;
  • On average, consumers in the US, Australia, South Korea, and Japan have over 100 apps on their smartphones;
  • 74% of all consumer spending on mobile apps was on games;
  • YouTube accounted for 9 of every 10 minutes spent in the top 5 video streaming apps in 2018. It was also the number 1 app by time spent in video streaming apps for all markets except China;
  • The global consumer spending on dating apps grew by 190% from 2016 to 2018. Tinder successfully defended its number 1 position.

In terms competition between apps and between companies, three Facebook apps occupied the top three spots on the table of monthly active users. The same trio also took the top spots on the most downloads table, but Facebook Messenger edge Facebook to the top. Netflix netted the highest consumer spend on apps (followed by Tinder), while Sony’s Fate/Grand Order sat at the top of the games enjoying the highest consumer spend. Tencent on the hand, thanks to its strong line-up of apps and games, was the company that consumers spent the most on in 2018.

App Annie 2019 MAU

App Annie 2019 downloads

App Annie 2019 spend

The firm predicted that in 2019, the total consumer spending in app stores will double that of the global box office, to reach $120 billion. When it comes to media consumption, the firm sees in 2019 that 10 minutes of every hour spent consuming media across TV and internet will come from video streaming on mobile. Increased availability of premium content and service will also help.

Two years ago, we started hearing from some quarters of the industry that apps economy was dead. To read the latest data from App Annie, that pronouncement was gravely premature.

US operators belatedly act to protect user location data

AT&T and Verizon announced that they will terminate all remaining commercial agreements that involve sharing customer location data, following a report exposing the country’s mobile carriers’ failure to control data sharing flow.

Jim Greer, a spokesman for AT&T, said in a standard email to media: “Last year, we stopped most location aggregation services while maintaining some that protect our customers, such as roadside assistance and fraud prevention.” Referring to the Motherboard exposé, Greer continued, “In light of recent reports about the misuse of location services, we have decided to eliminate all location aggregation services — even those with clear consumer benefits.”

This is similar to the position T-Mobile’s CEO John Legere adopted when responding to the criticism from the US Senator Ron Wyden (D-Ore.). Verizon also announced that the company will sever four remaining contracts to share location data with roadside assistance services. After this Version will need to get customers’ explicit agreement to share their data with these third-party assistance companies. Sprint, which was also caught out by the Motherboard report, is the only remaining nation-wide carrier that has not announced its plan on the issue.

This is all good news for the American consumers who are concerned with the safety of their private data. On the other hand, mobile operators have hardly been the worst offenders when it comes to compromising the privacy and security of customer data. Earlier, Google was exposed to have continued tracking users’ location even after the feature had been switched off, while Facebook has been mired in endless privacy controversies.

Monetising user data is only a side and most likely insignificant “value-add” business for the mobile operators, because they live on the service fees subscrbers pay. But it is the internet heavyweights’ lifeline. This may sound fatalistic but it should not surprise anyone if the Facebooks and the Googles of the world come up with more innovative measures to finance the “free” services we have benn used to.

Tencent is aiming to do a Spotify with its entertainment and music business

The China based internet company Tencent, listed on the HKSE, is planning to spin off its music and entertainment subsidiary and list it separately on an exchange in the US.

The chairman of Tencent, Ma Huateng, also known as Pony Ma, made the announcement on Sunday 8 July, one day before Xiaomi’s trading started on the HKSE. Despite the initial price was set at the bottom end of the estimated range, Xiaomi’s share price still closed the day 1.2 percent lower than its opening price, having recovered from a heavy loss of close to 6 percent earlier in the day.

In an interesting twist, Xiaomi’s CEO Lei Jun felt the share price was depressed by the on-going trade disputes between the US and China, when he spoke to the CNN. Meanwhile, the company’s President and Co-Founder Lin Bin told CNBC that the trade war is not a major concern “as Xiaomi had not done much business in the U.S.”

Although Xiaomi is a profitable business, its thin margin (capped at 5 percent by its owner on its hardware business, which accounted for roughly 90 percent of the whole business) made investors deem the price too high.

In comparison, the global leader in streaming music, Spotify, launched its IPO in April this year on NYSE. The price rose by 13 percent on its opening day, rising to $149.01 from the initial offering of $132, despite Spotify being a loss-making company. It was traded at $175.70 when the market closed on Friday 6 July.

We can only wait for Tencent to disclose the profit and loss of its Music and Entertainment group in the run-up to the IPO, but the group, which gets all its business from China, has reported healthy growths. Its paid subscriptions, mainly for video and music, grew by 24 percent to 147 million during the first quarter of 2018, and its total video revenues grew by 85 percent year on year.

The limited appetite on the Hong Kong market, especially when the channel to China-based investors, the instrument called CDR, is hard to come by, in contrast to the enthusiasm to invest in the future on the US market, may have helped tilt the decision by the Tencent board to go for the US stock market.