FREE 2017 GLOBAL MOBILE MARKET REPORT

FREE
VERSION

2017 GLOBAL
MOBILE
TRENDS, FORECASTS, APP
MARKETS, MOBILE DEVICE
USAGE, AND SMARTPHONE

MARKET REPORT
PENETRATION
TABLE OF CONTENTS

4
1. INTRODUCTION
Foreword, Scope & Methodology, Key Takeaways

12
2. THE GLOBAL MOBILE MARKET
Smartphone User Forecast, Top Publishers by Game & Non-Game Revenues, Most
Popular Smartphone & Tablet Brands, App Store Revenue Forecast, Features

24
3. ABOUT NEWZOO
Get the Real Deal, Working with Us, Our Global Partners
FREE 2017 GLOBAL MOBILE MARKET REPORT FREE 2017 GLOBAL MOBILE MARKET REPORT

FOREWORD
GLOBAL MOBILE MARKET REPORT

This is the maiden edition of Newzoo’s annual Global Mobile Market Report, which aims
to provide subscribers with a global overview of the mobile market with a focus on con-
sumers and their interaction with actively used devices, rather than defining the market
in terms of units shipped. Identical to Newzoo’s other flagship global reports on games
and esports, this report is part of a subscription service that includes quarterly update
reports and continuous access to a Tableau dashboard with smartphone penetration
and app revenue forecasts. The data is derived from our full mobile intelligence portfolio
of services that aims to serve all industries where mobile developments are a key con-
sideration for strategy, product development, or marketing.

“Our mobile intelligence portfolio is the result of almost

two years of preparation, partnering, data sourcing, and
modeling. The resulting intelligence focuses on active
devices, users, and the app (store) economy. From a

1
geographic perspective, our Chinese partner and strategic
JELLE KOOISTRA investor TalkingData plays a key role in enabling us to paint
a truly global picture, previously unavailable in the market.”
INTRODUCTION
Newzoo Head of Mobile

“In brief, we believe that the current pace of change in

consumer behavior, media consumption, and technology
requires a new type of intelligence firm that is agile,
innovative, truly global, and ahead of the curve.
Ultimately, we aim to be recognized as the #1 provider of
PETER WARMAN games, esports, and mobile intelligence in the world. This
Newzoo CEO & Co-Founder report is a key first step toward achieving that ambition.”

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SCOPE & METHODOLOGY

Newzoo’s mobile intelligence service provides unique and broad insight into the mobile for inequality to ensure a country’s wealth is representative of the larger population,
ecosystem, including active devices, users, apps, and app stores. Our analysis of histor- rather than a select group that is able to afford a smartphone. Finally, census data
ical data and current trends forms the basis of our views on key developments shaping allows us to monitor the total size of various countries, and how this will develop in the
the mobile market. Our market intelligence aims to provide actionable data that helps near future. Results are benchmarked with key clients and partners in the industry, as
answer important questions in areas such as product development and strategy. This well as third-party reports and industry news.
report combines data from three separate but linked models, which are the basis for the
most important takeaways. We reevaluate all our models on a quarterly basis, ensuring Key Definitions:
up-to-date information on the market for our clients.
• SMARTPHONE USER: An individual who possesses his/her own smartphone and
uses it at least once a month.
1. APP REVENUES MODEL & FORECAST • SMARTPHONE DEVICES USED: The total number of smartphone devices used at
Newzoo’s app store revenue forecast model is based on analysis of several data sources, least once a month by smartphone users.
including historical app store data, the financial performance of relevant companies,
and socio-economic development indicators for individual countries, such as internet 3. SMARTPHONE & TABLET TRACKING
and smartphone penetration rates. Historical app revenue and download estimates are Newzoo’s Smartphone and Tablet Tracking service is also based on a combination
corroborated by data from our strategic partner Priori Data and Newzoo’s proprietary of various data sources. We collect and process global monthly device usage data
app store tracking technology. from strategic partners, giving us aggregated data on the number of actively used
devices and models around the world, enriched with more detailed information, such
Key definitions: as chipset, screen size, or memory size per model. In total, the monthly sample consists
of more than 400 million devices. The results are extrapolated to total smartphones
• APP REVENUES: All direct consumer revenues that pass through app stores, and tablets actively used in each country and provide key insights into the MAU of
including third-party Android stores. Advertising and e-commerce revenues are brands, models, and spec details (e.g., type of device, battery sizes, screen resolutions,
excluded. and many more characteristics). We focus on the two dominant mobile operating
• NON-GAME APP REVENUES: Revenues generated through in-app purchases, systems, iOS and Android, and cover the top 100 countries in terms of smartphone
subscriptions, or paid installs from apps that are not categorized as games by app users. Together, these 100 countries cover 98.5% of the smartphone users in the world.
stores.
• GAME REVENUES: Revenues generated through in-app purchases, subscriptions, Key definitions:
or paid installs from apps that are categorized as games by app stores.
• ACTIVE DEVICE: A device used at least once a month.
2. SMARTPHONE USERS MODEL & FORECAST • SMARTPHONE: A device with a screen size under 7 inches and an advanced oper-
A key part of the report is sizing the smartphone market in terms of active users, rather ating system.
than units shipped. We focus on how many consumers use a smartphone on at least • TABLET: A device with a screen size of 7 inches or larger and an advanced operating
a monthly basis. To calculate this, we have developed a detailed model using several system.
socio-economic development indicators per country. Most importantly, we consider • DEVICE BRAND: Manufacturer or brand name of the device as indicated by the
a country’s economic development to determine how many consumers can afford device software.
a smartphone. Furthermore, we make use of demographic variables, as the smart- • HIGH-END DEVICE: Devices with at least 2GB of RAM, 2 CPU cores, NFC, fingerprint
phone penetration in certain age groups will be higher than others. We also adjust scanning, 4G compatibility, and a launch date after 2014.

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KEY TAKEAWAYS
REGIONS
All data sources are grouped into six regions: North America, Latin America, Western
Europe, Eastern Europe, the Middle East and Africa, and Asia-Pacific.

SMARTPHONE USERS In 2016, there were 2.3 BILLION SMARTPHONE

AND PENETRATION USERS globally, or 31% of the total population. In
2020, this will grow to 3.6 billion smartphone users,
close to half of the world’s population. Together, they
will use 4.2 billion smartphone devices in 2020.

CHINA has the most smartphone users, with 717

MILLION actively using a smartphone in 2017. China
is followed by India, the U.S., Brazil, and Russia as the
largest smartphone markets by number of users.

In 2016, INDIA overtook the U.S. as the world’s

second-biggest smartphone market. The gap
between the two countries will increase as India will
NORTH AMERICA EASTERN EUROPE grow strongly to 300 MILLION smartphone users by
LATIN AMERICA MIDDLE EAST & AFRICA the end of 2017, while the number in the U.S. will only
WESTERN EUROPE ASIA-PACIFIC grow modestly to 226 million.

The world’s highest SMARTPHONE PENETRATION

can be found in the MIDDLE EAST. In countries such
as Qatar, the United Arab Emirates, Bahrain, and
Kuwait, more than 75% of the country’s population
has a smartphone.

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SMARTPHONE At the end of 2016, the 100 LARGEST MARKETS in APP STORE REVENUES APP STORE REVENUES are forecast to grow from
AND TABLET DEVICES the world in terms of smartphone users accounted $46.2 BILLION in 2016 to $85.0 BILLION in 2020.
for more than 98% of all smartphone users. In these Over the same period, revenues from mobile games
countries, 2.8 BILLION SMARTPHONES were in use, will grow from $38.6 billion to $65.0 billion, result-
in addition to 260 MILLION TABLETS. ing in a significant increase in market share of
non-game apps. The share of total app store reve-
nues accounted for by non-game apps is expected
SAMSUNG is the leading smartphone manufacturer, to grow from 16.4% ($7.6 billion) in 2016 to 23.6%
with 859 MILLION of all smartphones in use globally ($20.0 billion) in 2020.
made by the Korean company. APPLE ranks second
with 704 MILLION actively used smartphones. The
two market leaders together account for 56% of the The biggest region in the world in terms of app store
total number of smartphones that are currently in revenues in 2017 is ASIA-PACIFIC, accounting for
use worldwide. $31.8 BILLION (56%). Taking third-party app stores
into account, China is the biggest single market
within Asia-Pacific, generating $16.4 billion in con-
At the end of 2016, there were 260 million active sumer spend on apps. North America and Europe are
tablets. The joint MARKET SHARE of SAMSUNG considerably smaller in terms of revenues, with $10.6
AND APPLE in this segment is even higher with 89%. billion and $8.5 billion, respectively.
Apple leads with 166 million active tablets, more than
double Samsung’s 65 million.
CHINA is also poised for relatively strong growth
in the coming years, with a CAGR of +21.2% from
CHINA is the largest smartphone market with 875 2016 to 2020, resulting in revenues of $26.3 billion in
MILLION smartphones in use at the end of 2016. Its 2020. The regions with the strongest growth in the
sheer size allows manufacturers that largely focus on same period are the Middle East and Africa (+36.0%
the local Chinese market, such as VIVO and OPPO, to CAGR) and Latin America (+25.9% CAGR).
reach a scale similar to other global players. In fact,
six out of the top 10 global brands in terms of smart-
phone use have Chinese roots.

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 THE GLOBAL
MOBILE MARKET
& SELECTED
TRENDS
2

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 FREE 2017 GLOBAL MOBILE MARKET REPORT

SMARTPHONE USER FORECAST

GLOBAL
3,551M
GLOBAL SMARTPHONE USERS PER REGION 3,217M 220M

304M
2015-2020 2,892M 207M

294M 281M
193M
2,590M
284M 271M
2,317M 179M 458M

2,074M 165M 274M 262M

400M
337M
EASTERN EUROPE 152M 263M 252M 346M
302M
252M 242M
WESTERN EUROPE 296M
266M 585M
231M 252M
232M 485M
NORTH AMERICA 215M 201M 387M
300M
174M
MIDDLE EAST & AFRICA 228M
171M 881M
830M
LATIN AMERICA 717M
775M
658M
597M
INDIA
378M 427M 484M
340M
CHINA 283M 308M

ASIA-PACIFIC*
*Excludes India & China 2015 2016 2017 2018 2019 2020

Globally, there will be 2.6 billion smartphone users in 2017. More than half of these will come from the Asia-Pacific
region, with 717 million smartphone users in China alone. Together, Asia-Pacific, Europe, and the Middle East and
Africa will account for 80% of the global total this year. In 2020, there will be 3.6 billion smartphone users, with

GLOBAL Asia-Pacific as the biggest growth region thanks to countries such as India, Indonesia, and China. Asia-Pacific
OVERVIEW | 2017 will have almost 2 billion smartphone users in 2020, while Europe, the Middle East and Africa, and North America
together will have 1.3 billion. Latin America will surpass North America in terms of smartphone users in the coming
years. Developing countries, such as Nigeria, will grow fast in terms of smartphone users compared to mature
markets, such as Europe and North America.

TOP COUNTRIES BY SMARTPHONE USERS

TOTAL APP REVENUES
2017 | GLOBAL
POPULATION $56.4Bn
7.5Bn
RANK COUNTRY SMARTPHONE USERS SMARTPHONE PENETRATION

1 CHINA 717M 51.7%

2 INDIA 300M 22.4%

ONLINE MOST POPULAR 3 UNITED STATES 226M 69.3%

POPULATION SMARTPHONE BRAND
4 BRAZIL 79M 37.7%
3.7Bn SAMSUNG (31%)
5 RUSSIAN FEDERATION 78M 54.7%

6 JAPAN 63M 50.1%

7 GERMANY 55M 68.8%

SMARTPHONE HIGH-END DEVICES* 8 INDONESIA 54M 20.7%

USERS 20.3% 9 MEXICO 52M 40.7%

2.6Bn
10 UNITED KINGDOM 44M 68.6%

*high-end devices have at least 2GB of RAM, 2 CPU cores, NFC, fingerprint scanning, 4G compatibility, and were launched after 2014.

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MOBILE VIRTUAL REALITY

HOW VR-READY IS THE MOBILE WORLD?

GLOBAL
FEATURE
MOBILE Virtual reality will one day be part of daily life, but where do we stand today and In China, mobile VR has been enthusiastically received. As VR arcades and “expe-
VIRTUAL
REALITY what can we expect in the meantime? Since 2016, manufacturers have been selling VR rience zones” mushroomed across cities and shopping malls, local manufacturers
headsets, allowing users to enter new worlds and enjoy new experiences. The highest have been very quick to spot the mobile VR opportunity. Baofeng Mojing reported
profile devices include the PlayStation VR, Oculus Rift, and HTC Vive, all of which are selling more than 1 million devices priced at around $30 each, and online retailer
tethered and developed with PC and console gaming in mind. These high-end devices Alibaba reported sales of more than 300,000 mobile VR devices per month. These
have enjoyed considerable commercial success, particularly the PlayStation VR with are all manufactured domestically, based on the open-source Google Cardboard
almost 1 million devices sold in just over four months since launch. The consumer inter- specs, by brands like RiTech, VirGlass, Pico VR, Baofeng Mojing, Deepoon, and most
est for these devices will remain strong, but they are unlikely to become mainstream of the smartphone manufacturers, generally retailing for somewhere between $20
until prices come down, more (non-gaming) content is available, and various practi- and $100.
cal issues are solved. For instance, many players still experience motion sickness and There are several factors that will contribute to the mass adoption of mobile VR. First,
setting up a VR environment typically requires a lot of free space. the quality of the relatively affordable mobile VR devices will improve substantially over
Mobile VR presents a far bigger market opportunity in the short term. Handset man- time, as teething problems related to manufacturing new innovative products are over-
ufacturers across the globe have been developing their own headsets, with Samsung come. Being able to enjoy a good quality mobile VR experience by purchasing a $30
Gear VR and Google Daydream taking the lead in the West and many vying for market device will open a larger market.
leadership in China. How have these peripherals performed and what will trigger mass Secondly, close to a third of smartphones still have very limited options for experienc-
uptake? ing VR. Significantly, Apple has not yet released a VR device for its smartphones, which
Looking at hardware (unit) sales, mobile VR is not yet a billion-dollar business, with means more than 700 million smartphones cannot access meaningful VR content. Like
devices generally retailing for less than $100, compared to the $400+ price point for all devices, iPhones work with Google Cardboard, but this is probably not the setup
a tethered VR headset. Nonetheless, mobile VR headsets have commercial traction, as that most iPhone owners get excited about. Compatibility issues, such as the Daydream
illustrated by Samsung’s announcement that it had sold 5 million Gear VR headsets by being incompatible with the latest Samsung Galaxy models, also need to be addressed
January 2017 (initially launched in November 2015). While this seems like a big number, as they unnecessarily hinder growth.
it is only a fraction of the overall addressable market, defined as Samsung devices Finally, the increased availability of good quality content will be a key driver. Video
compatible with Gear VR. If the 5 million device sales were in the U.S. alone, they formats have the potential to speed up the mass adoption of (mobile) VR. In addition to
would have covered 21% of the addressable market. However, the total global market the obvious celebrity and nature themes, we expect sports and music events to play a
of compatible Samsung devices is more than 180 million, meaning market penetration key role in mass adoption. While there will be many mobile VR games, they will not likely
is less than 3%. be the content category that will monetize best. The natural fit between VR and events
is illustrated by the 2017 Super Bowl, where viewers could watch VR highlights of the
game following a partnership between Fox Sports and LiveLike. NBA fans, meanwhile, can
watch a VR game every week on their Gear VR or Daydream headsets, with the experi-
NUMBER OF ACTIVE DEVICES COMPATIBLE PER VR PLATFORM ence described as “surprisingly good” and “with a future on the court” by Fortune. This VR
GLOBAL | JANUARY 2017 content is currently being wrapped into existing subscription models, but once it becomes
possible to buy access to a single experience or game in VR, the market will really take off.
The current model limits the potential for the NBA, for instance, to tap into new audiences
GEAR VR DAYDREAM
and revenue streams. This opportunity is huge within Western markets, but even bigger in

184.4M 4.9M Asia and particularly China, where Western sports are very popular.

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MOST POPULAR SMARTPHONE & TABLET BRANDS DEVICE SPECS

GLOBAL HOW DO TECHNICAL SPECS INFLUENCE YOUR GLOBAL STRATEGY?

Globally, there were 2.8 billion active smartphones in use at the end of 2016, more than half of which were in the The mobile market is increasingly global, but every country or region has its combination
Asia-Pacific region. Samsung and Apple were the two biggest manufacturers, with Samsung edging out Apple of features that makes it unique. Aside from the obvious language, cultural, and economic
with 859 million active smartphones, or 31% of smartphones used globally. The global ranking of Chinese brands aspects, one major differentiator is the technical capabilities of the devices used. Technical
Huawei, Xiaomi, OPPO, and Vivo was mostly due to their performance in the Asia-Pacific market, especially China. specs, including the relative popularity of operating systems, play a key role in defining the
GLOBAL
Between 60% and 85% of the user base of these brands was in China. While Samsung was the most popular market opportunity for apps and mobile services on a country-by-country basis. FEATURE
DEVICE
brand overall, Apple’s iPhone 6 was the most active smartphone model globally last year. LG performed best The popularity of Android versus iOS is an important consideration, as iOS tends to be SPECS
across the Americas, with about 50% of all active LG smartphones in these two regions (28 million active smart- associated with wealthy and higher-spending consumers, while Android skews toward the
phones in North America and 21 million in Latin America). Asia-Pacific and North America were the two biggest young and more cost-conscious. Majority iOS markets, such as the U.S., Western Europe,
smartphone regions, and Apple ranked #1 in both. and Japan, generate high revenues per device. Android majority markets offer huge
Apple was the world’s leading tablet brand, holding almost 64% of the market share with 165 million active growth potential, but also more challenges due to fragmentation and lower purchasing
devices at the end of 2016. Apple was also the #1 tablet manufacturer across each of the individual regions. power. Fragmentation includes the many different versions of Android, with each manu-
Together, Apple and Samsung accounted for almost 90% of the global tablet market, leaving little room for other facturer tweaking the operating system according to its preferences, the many different
brands. The Asia-Pacific region is the largest tablet market, representing more than 80 million active tablets, with device types, and the diverse app distribution channels.
North America and Western Europe following with around 60 million active tablets each. The Apple iPad Air and The popularity of Android versus iOS is not enough to assess market potential. The quality
Air 2 were the most popular tablet devices, accounting for almost one in five active tablets globally. and power of mobile devices in use are at least as important. The share of high-spec
devices in a market reflects consumers’ purchasing power, and high-end device owners

ACTIVE
tend to spend more on apps. In South Korea, for example, Android is dominant because
RANK MANUFACTURER MARKET SHARE
SMARTPHONES
of Samsung, but the country has a very large share of high-end devices. Our app store
TOP 10
1 SAMSUNG 859M 31%
intelligence shows that spending per device in South Korea is indeed very high compared
2 APPLE 704M 25%
SMARTPHONE BRANDS BY to other Android-dominated markets.
3 HUAWEI 205M 7%
MONTHLY ACTIVE DEVICES A detailed look at Newzoo’s Monetization Metrics by type of device, powered by our
4 XIAOMI 176M 6%
2016 | iOS AND ANDROID partner deltaDNA, further supports our view that high-end devices monetize better, as
5 OPPO 152M 5%
GLOBAL illustrated by the conversion rates of premium devices such as the Galaxy S7 and the
6 VIVO 110M 4%

iPhone 7 Plus. Finally, as most iPads in use are more than three years old, understanding
7 LG 93M 3%

8 SONY 79M 3%
device specs is important in this case too.

9 MOTOROLA 76M 3%

10 LENOVO 50M 2%

2,772M 100%
CONVERSION RATE FOR APPLE & SAMSUNG
FLAGSHIP DEVICES | 2017
TOP 5 RANK MANUFACTERER ACTIVE TABLETS MARKET SHARE

TABLET BRANDS BY 1 APPLE 166M 64%

DEVICE CONVERSION RATE DEVICE CONVERSION RATE

MONTHLY ACTIVE DEVICES 2 SAMSUNG 65M 25%

APPLE IPHONE 7 PLUS 4.6% SAMSUNG GALAXY S7 EDGE 3.4%

2016 | iOS AND ANDROID 3 LENOVO 6.5M 2% APPLE IPHONE 7 3.2% SAMSUNG GALAXY S7 3.4%

APPLE IPHONE 6S PLUS 2.9% SAMSUNG GALAXY S6 EDGE 2.9%

GLOBAL 4 HUAWEI 5.8M 2%
APPLE IPHONE 6S 2.3% SAMSUNG GALAXY S6 2.4%
5 ASUS 5.2M 2%
APPLE IPHONE 6 2.5%
260M 100%

Based on the top 100 countries in terms of smartphone users, representing more than 98% of the world’s smartphone population. Based on monthly active use at the end of 2016 (December 2016).

Data provided by deltaDNA. Conversion rate equals the share of players that have converted to spending money at least once for an average free-to-play game.

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APP STORE REVENUE FORECAST

GLOBAL

In 2017, direct consumer spending in the global app market will jump to $56.4 billion, a year-on-
APP STORE REVENUES | GAME & NON-GAME SPLIT year growth of 22%. Of these revenues, 82% will come from mobile games ($46.1 billion), while
GLOBAL | 2015-2020 $10.3 billion will come from non-game apps and services. China, the world’s biggest mobile
2015-2020 market, will account for more than 29% of total revenues ($16.4 billion). It will also account for
NON-GAME APP REVENUES CAGR more than 50% of all app revenues in Asia-Pacific, which will total $15.5 billion. Meanwhile, North
GAME APP REVENUES $85.0Bn +18.7% America’s lucrative market will generate another $10.6 billion in 2017, while European consumers
$76.2Bn will spend $8.5 billion.
24%
$66.2Bn
22%
$20.0Bn +29.5%
$56.4Bn 20%

$46.2Bn 18%

$36.0Bn 16%
APP STORE REVENUES | PER REGION
76%
15%
78%
GLOBAL | 2017
80%
82% $65.0Bn +16.3%
84%
85%

2015 2016 2017 2018 2019 2020

North America
19%
29% Latin America
Global app store revenues are poised for strong growth in the coming years. As the number of smartphone Western Europe
users increases from 2.1 billion in 2015 to 3.6 billion in 2020, the potential for apps to monetize their services 5%
Eastern Europe
through different app stores will also expand. We estimate that revenues from games within the app stores $56.4Bn
will grow from $30.5 billion in 2015 to $65.0 billion in 2020, a CAGR of +16.3%. Most of this growth will come Middle East & Africa
12%
from Asia-Pacific and the Middle East and Africa, while more mature markets of North America and Europe
will continue to grow at a lower but stable rate.
4% China
Revenues from non-gaming services will grow dramatically, as companies figure out the best way to mone- 27% 5% Lorem ipsum
tize their services through apps and the app stores. Total revenues from the non-gaming segment are set to *Excludes China

increase from $5.5 billion in 2015 to $20.0 billion in 2020, a CAGR of +29.5%. We estimate these revenues to
grow healthily across the board, in developing and mature markets alike.

FULL REPORT INCLUDES THIS DATA FOR 6 REGIONS FULL REPORT INCLUDES THIS DATA FOR 6 REGIONS
WITH SPECIAL FOCUS ON CHINA & INDIA WITH SPECIAL FOCUS ON CHINA & INDIA

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APP STORES: THE END OF AN ERA?

APP DISTRIBUTION BEYOND THE APP STORE AND GOOGLE PLAY

Outside of China, Apple’s App Store and Google Play have been the major distribution Increased competition may also come from platform-on-platform businesses,
GLOBAL channels for most mobile app developers over the past decade. However, it is becom- such as Line and Kakao. Currently, they often only add another layer of marketing
FEATURE
THE END ing increasingly apparent that a new era is dawning, one in which app distribution no costs to app developers, sometimes taking total distributions costs to more than 50%
OF AN ERA longer depends almost entirely on a duopoly enjoyed by Apple and Google. It is not of gross revenues. Their huge marketing and distribution power in specific markets
surprising that these stores are attracting increasing competition, having earned $6 can justify this, but the benefit of reducing these costs is equally huge. The question is
billion and $4 billion in gaming revenues in 2016, respectively, through their 30% app whether it will be publishers abandoning platform-on-platform propositions, or firms
store cut (see newzoo.com/top-25-companies-2016). like Line and Kakao side-stepping app stores, or something else altogether.
There are three complementary drivers of change. The first is the impact of (inter) The third and final driver of change in the mobile distribution market is further inno-
national politics on the reach of the two main global stores. The second is the increased vation. Initiatives like Amazon Underground, which pays developers for every minute
competition from other stores with a similar business model and from alternative dis- their game is played by users, and Hatch, which allows players to stream premium
tribution models, such as direct downloads from websites. The third is innovation, games in return for a monthly subscription or advertisements, are both encouraging
undermining the established business model of the dominant app stores. premium developers to reduce their App Store and Google Play dependencies.
China is the main example of political impact; the ban on Google Play in the The changing nature of apps is potentially even more important. The arrival of Google’s
Chinese market has allowed independent Android stores to flourish, despite the Instant Apps for Android, in which Google enables access to content contained within
segment being fiercely competitive. Android accounts for 72.5% of devices in apps without installing them, deliberately blurs the line between the mobile web and
China, and 61.5% in terms of revenues. Even if Google Play could operate in China, fenced-off applications. It helps users access app functions that they only need occa-
it would be very difficult for it to gain a meaningful market share, as the competing sionally (for example, booking a last-minute hotel room) directly through search in a
stores have developed a huge lead and are fully localized. Nevertheless, the market mobile browser. Tencent has launched similar “mini-programs” in China for WeChat.
remains very fragmented. Analysis by Newzoo and our partner TalkingData indi- In summary, the long-established dominance of both stores is under threat on several
cates that any developer wishing to reach 80% of the Android market in January fronts. This could lead to sharply reduced fees, as Apple already did for ongoing sub-
2017 must release its app on at least five stores: Myapp, 360 Mobile Assistant, Baidu scription fees. App stores could become more of a utility with a different business
Mobile Assistant, Xiaomi App Store, and Huawei’s store. model, charging a modest distribution fee, while generating revenues primarily through
Politics can also indirectly influence the reach of Google Play and the App Store. promotions and advertising.
In Iran, local app store Café Bazaar has carved out a defensible niche for itself by
filling a void left by Google and Apple, as Iran is a country where American firms
tread carefully due to political sensitivities at home.
The second driver of change comes from increased competition from newcom-
ers with similar business models and firms using alternative distribution. The most APP FEATURE
threatening ones in the Westerns markets are perhaps Amazon and Facebook.
While Facebook Messenger’s Instant Games currently only distributes free mobile
games, the presence of a store within an app can pose a threat. Further compe- APTOIDE
tition is coming from increasingly common alternative distribution, especially in Aptoide is a third-party Android app store that allows companies or individuals to provide their
Asian emerging markets. Publishers are keen to avoid app store fees by promoting own selection of apps using a syndicated infrastructure. For instance, operators and OEMs can
direct downloads of APK files to Android users, of which Garena in Southeast Asia partner with Aptoide to deliver relevant local apps in a polished way. In return, Aptoide receives
and NetEase in China are two examples. revenue share for any advertising or purchase revenue generated by these apps.

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KEY TOPICS & DATA POINTS REGION SCOPE

• GLOBAL MOBILE MARKET (2015-2020): • NORTH AMERICA

GLOBAL & SIX REGIONS WITH SPECIAL • LATIN AMERICA

COUNTRY FOCUS: INDIA & CHINA • EASTERN EUROPE

• KEY TRENDS (E.G., VR, AR, MOBILE • WESTERN EUROPE

PAYMENTS, FUTURE OF APP STORES) • MIDDLE EAST & AFRICA

• RANKINGS: TOP 50 COUNTRIES BY • ASIA-PACIFIC

SMARTPHONE USERS & PENETRATION

• TERMINOLOGY & METHODOLOGY

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