2019-2020 H1 Global App Industry Insight Analysis.

Editor’s note: This article is from the WeChat public account “Feishu Shennuo Group” (ID: sino_group) OF: Feishu Shennuo Research Institute.

In 2019, the number of Chinese App[1] products going to sea is increasing, and the categories are becoming more abundant, and head products such as TikTok have formed a global influence , On the whole present a good situation of improving both quantity and quality. However, since 2020, the external environment has been turbulent, and the development pattern and trend of the global App industry have also experienced huge fluctuations:

  • In the first half of the year, the new crown epidemic swept the world, a large number of users were isolated from home, and the demand for online office, learning, medical treatment, shopping, news, entertainment, etc. was strong. The downloads and income of related apps rose rapidly, and travel, travel, Related apps such as sports outdoor are seriously frustrated;

  • Since the end of June, India has repeatedly issued policies to ban a large number of Chinese apps without any reason through administrative means, and many apps that go to sea have turned their bows to explore other markets;

  • At the end of July, U.S. President Trump stated that TikTok would be banned from operating in the U.S. After that, relevant parties engaged in fierce gaming. This incident and the Indian ban has caused widespread concern in the industry.

Our analysis believes that although the industry is becoming increasingly complex and changeable, opportunities and challenges coexist. The general trend of Internet globalization will not be reversed. There are still plenty of opportunities for Chinese apps to go overseas. To this end, we have sorted out the current situation, changes and trends of the global App industry in 2019-2020H1.

Global App Industry Observation

01 Global App downloads remain stable, and downloads of commercial and medical categories have increased significantly during the epidemic< /h3>

Let’s first look at the App industry from the perspective of downloads. In 2019, global App downloads reached 73.5 billion times, an increase of 2% year-on-year, of which about 70% came from Google Play. In 2020H1, under the influence of the new crown epidemic, different App categories have fluctuated. On the whole, we believe that the App industry as a whole will continue to maintain a steady growth in downloads, and it is expected to reach 75.8 billion times (+3%) in 2020.

Specifically, many countries have introduced “home orders” and other epidemic isolation measures, which have led people to use apps more to meet their needs in work, study, and life. In this context: 1) The download growth rate of business, medical, health and fitness, education, news magazines and other categories has increased significantly, and the performance is far beyond 2019; 2) The downloads of shopping category are in the United States, Brazil, the United Kingdom, etc. The market has achieved substantial growth, but there has been a decline in India and Indonesia, which has dragged down the overall global downloads. 3) The travel category was affected by the significant reduction in business and travel itineraries, and the sports category was affected by the suspension of many events in the first half of the year. Significant decline.

02 Global App Revenue[2] is growing rapidly, news and magazines, business, education and other categories are growing rapidly

From a revenue perspective, global App revenue in 2019 reached 17.5 billion U.S. dollars, an increase of 27% year-on-year, of which about 79% came from the App Store, showing that iOS users are more High consumption level. In 2020H1, the new crown epidemic has promoted the growth of the online economy. We believe that the overall revenue growth of the App industry will maintain the high level of 2019. It is expectedIn 2020, it will reach USD 21.6 billion (+24%).

Specifically, most categories of income continue to grow well under the epidemic: 1) The utilization rate of news magazines, business, education and other categories has increased significantly, and the income growth rate has exceeded 40%; 2) Revenue from travel and sports categories has declined, and revenue from travel and travel has dropped by 25%; 3) Revenue from music has changed from rapid growth in 2019 to decline, mainly due to digital downloads (such as single sales, digital album sales, etc. ) With a substantial reduction, the digital music market is accelerating to evolve towards a stream-oriented structure.

03 Looking to the future, the online economy is in the ascendant, and the App industry is highly competitive

During the COVID-19 pandemic in 2020, many people tried to use online channels for office, study, and entertainment for the first time, fully experiencing the convenience and efficiency of high-quality apps. At the same time, most countries are actively improving the level of network infrastructure, and smart phones have become a necessity for more and more people. Therefore, we believe that in the fields of business, education, health, shopping, finance, etc., the online economy is on the rise and there are abundant opportunities for related apps.

In addition, content apps, including video entertainment, photo and video (including short videos), music, books and comics, news, etc., can provide users with “on demand” content on demand, and they have certain price advantages based on resource integration , Is expected to continue to expand the scale of users. In this context, the competition for content apps is becoming increasingly fierce, and the key is to increase content differentiation. To this end, head products have begun to integrate the upstream and downstream of the industrial chain, increase the supply of original works, and transform from a content distribution platform to a combination of content production + distribution.

For China’s overseas apps, the attractive market space means fierce competitive pressure. The number of App products is still growing rapidly, and it is necessary to be excellent in terms of functional design, content supply, user experience, model innovation, etc., in order to gain more market share. At the same time, the digital economy is nowPay attention to the emergence of local products, and local policy adjustments to protect local products have also put forward new tests for overseas apps.

Above, we reviewed and looked forward to the performance of the global App industry, and we also found that due to the different economic levels of mature markets and emerging markets, the development stage of the Internet industry is also different, regardless of the size of the App industry or the epidemic In terms of performance, each has its own characteristics.

Mature market insights

01 Mature markets[3] have developed economies and are the main source of revenue for the App industry

Mature markets have developed economies, and users have strong awareness of paying and spending power. With the prosperity of the digital economy, online spending has grown rapidly. The top 10 countries by global app revenue (except China) are all mature markets. Among them, in the past three years, Japan’s App revenue has achieved a high growth rate on a relatively high base, and its performance is very impressive, mainly due to the good payment habits of users and the development of short video, comics, film and music, and other industrial chains.

02 The epidemic makes consumers in mature markets more dependent on the online economy

Mature markets have profound economic background. Although the epidemic prevention situation in Western Europe and North America is not optimistic, the economy has been impacted to varying degrees, but the per capita income is still at a relatively high level. Both quality and smartphone penetration rates are high, and users have formed the habit of relying on online platforms. Therefore, under the epidemic situation, local users extensively use apps to complete various activities, so that not only does the app revenue have not been dragged down, but it maintains a good growth trend. In 2020H1, the growth rate of app revenue in Japan is close to 40%, and the growth rate in Germany and the UK is also over 20%.

Emerging Market Insights

01 Emerging Market[4] has a large population and is the main source of App downloads

Emerging markets have a large population and a relatively high proportion of young people. With the increase in the number of smartphones, the number of app downloads has also increased. Top 10 countries in global app downloadsExcept for the United States and Japan, all are emerging markets. Based on the huge population size, India ranks first in downloads of all App categories.

02 The epidemic slowed down the development of the App industry in some emerging markets

The economic foundation of emerging markets is relatively weak. The new crown epidemic hinders the pace of economic growth and further spreads to the smartphone market and app market, resulting in app downloads and revenue Growth has slowed, and countries such as India and Indonesia have even declined.

Due to differences in development stage, industrial structure, social culture, etc., some emerging markets have performed well under the epidemic. For example, Brazil’s download volume in 2020H1 increased by nearly 15%, mainly due to local users’ opinions on business, finance, shopping, The use of apps such as education and fitness has increased.

Smart phone market review and outlook

The fluctuations in the smartphone market will also be transmitted to the App industry. Therefore, we inspect the smartphone market at the end of the report to support the research and judgment on the development trend of the App industry.

01 The smartphone market continues to decline, and there will be both development momentum and uncertainty in the future

From 2017 to 2019, global smartphone shipments declined for three consecutive years. As the new crown epidemic is still spreading, the prospects for economic recovery in many countries are still uncertain. As a result of consumers shrinking spending, smartphone shipments are expected to drop by about 9.5% in 2020. However, in the long run, whether it is a mature market or an emerging market, the smartphone industry still has momentum for development and supports the growth of the App industry.

1) For mature markets such as North America, Western Europe, Japan and South Korea, although the penetration rate of smartphones is already at a high level, 5G construction has also taken the lead. The future 5G implementation is expected to enhance user experience and drive users to switch phones. 2) For emerging markets such as Southeast Asia, India, and Brazil, there is still room for improvement in smartphone penetration rate (for example, it is estimated that Indonesia’s penetration rate will only be about36.5%, India’s penetration rate is only about 30.7%), the public’s demand for the first smartphone has yet to be met.

It should be noted that whether it is the advancement of 5G construction or the popularization of smartphones, it depends on the continued economic development. However, under the new crown epidemic, economic recovery is uncertain, which may affect consumption power and inhibit users from purchasing new machine.

To sum up, 2020 is a year of ups and downs. Looking forward to 2021, we believe that apps will build a complementary ecosystem of online and offline integration in more fields, thereby changing the lifestyle of more and more people around the world. In this process, Chinese apps that have accumulated rich experience in a huge market of 1.4 billion people are promising.

Note:

[1]: The apps mentioned in this article do not include game apps.

[2]: Revenue data mainly refers to revenue in the app store, such as subscriptions, memberships, in-app purchases, etc., excluding revenue from outside the app store, such as advertising revenue, transaction commission revenue, etc.

[3]: Mature markets refer to developed economies such as North America, Western Europe, Japan, South Korea, Australia, and New Zealand.

[4]: Emerging markets refer to economies that have a good economic growth foundation and momentum, and have the potential to become mature markets. The emerging markets mentioned in this article mainly refer to the definitions of MSCI and The Economist, but exclude mainland China .