Apps are already bigger than Hollywood, let alone music



Apple’s App Store generated $1.7bn in transactions during July this year – a stat that got a bit lost when Apple’s services boss Eddy Cue announced it, due to being paired with his announcement of 11m trial members for Apple Music.

That $1.7bn means a yearly run-rate of around $20.4bn, which as analyst blog Asymco notes, is up from around $13.7bn a year ago. “Nice growth,” reckons Asymco’s Horace Dediu. Indeed.

His graph cross-referencing Apple’s App Store billings against other forms of entertainment makes for sobering reading: they overtook iTunes music sales in 2011. But it’s the comparison with Hollywood that Dediu is more interested in.

“It’s not likely to happen this year but next year Apple’s apps will almost certainly overtake global box office in revenues,” he writes. “This contrast with movies gives some perspective on the creation of a new market. Apps did not exist as a medium in 2007. But, together with Android apps, apps are likely to have already overtaken revenues from an industry that is a century old.”

As an analyst within Nokia between 2001 and 2009, Dediu surely knows there *was* an apps market before the App Store launched in 2008 – it was just almost-entirely focused on games sold by mobile operator portals, and was much smaller (and more dysfunctional in many ways) than the post-2008 explosion.

His claim that Android revenues from Google’s Play store are not public can also be dug into a bit more. Google said in February that it had paid out $7bn to Android developers in the previous 12 months, so factor Google’s 30% cut back in, and that’s a yearly run-rate of $10bn of app transactions – and thus just over $30bn for Apple and Google’s app stores combined if Google Play’s monthly transactions haven’t grown since February (which they likely have).

But yes, apps as a $30bn-a-year business just on the two biggest app stores – more than double the $15bn of global recorded-music revenues reported by the IFPI for 2014, which is unlikely to increase much in 2015.

But before we all polish our CVs to apply for jobs in the postroom at King or Uber’s offices, it’s worth remembering that music is part of this apps boom too. At the time of writing, Spotify and Pandora are the third and fourth top-grossing apps in Apple’s US App Store – behind only Game of War and Clash of Clans, but ahead of Candy Crush Saga…

Further reading: Music Ally’s 10 Things to Know about Android (subscribers only)

Stuart Dredge

Read More: Analysis News
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