2020 to be mobile’s biggest year; mobile ad spend to reach $240 bn

The year 2020 is set to be mobile’s biggest year, with advertising fueling revenue, as per App Annie’s annual ‘State of Mobile 2020’ report. Mobile ad spend is slated to reach $240 billion this year, as brands harness mobile’s potential. Moreover, the streaming wars will heat up in 2020 and consumers will decide where they spend their 674 billion hours on mobile, the report states. 

The report further states that Apple Arcade and Google Play Pass will result in innovative new games for consumers and new revenue streams for publishers. 5G is the next battleground, and gamers will be first to reap the rewards. Consumer and mobile ad spend is expected to top $380 billion globally in 2020. 

According to App Annie, annual worldwide downloads have grown 45 per cent in the 3 years since 2016 and 6 per cent year over year, which is particularly impressive given this excludes re-installs and app updates. Downloads are largely fueled by emerging markets, including India, Brazil and Indonesia. Consumers in mature markets like the US, Japan and Korea have seen download growth level off, but are still seeking out new apps. Downloads in 2019 alone topped 12.3 billion, 2.5 billion and 2 billion in the US, Japan and South Korea, respectively. 

Worldwide app store consumer spends in 2019 stood at $120 billion, up 2.1x from 2016. 

Games now make up 72% of all app store spend 

Subscriptions in non-gaming apps fueled growth in spend, from 18 per cent share in 2016 to 28 per cent in 2019. China remains the largest market, making up 40 per cent of global spend. Spend in both mobile gaming and non-gaming mobile subscriptions has fueled growth in mature markets like the US, Japan, South Korea and the UK. By 2023, the mobile industry is set to contribute $4.8 trillion to global GDP. 

Across the markets analysed, consumers are spending 35 per cent more time in mobile in 2019 than 2 years prior. Mobile-first emerging markets like Indonesia, Brazil and India continue to spend the most time in mobile each day. France, India and Canada saw strong growth, with the average user spending 25 per cent more time in mobile each day in 2019 than in 2017. 

In-app subscriptions contribute to 96% of spend in top non-gaming apps 

On iOS in the US, 97 per cent of non-gaming consumer spend in the top 250 apps was driven by apps with subscriptions in 2019. On Google Play, this was slightly lower at 91 per cent. 

Dating and video streaming apps have seen strong success with in-app subscriptions: Tinder, Netflix and Tencent Video topped the 2019 consumer spend chart for non-gaming apps. 

Publishers are taking advantage of the expanded monetisation opportunities from in-app subscriptions. On Google Play, 79 per cent of the top 250 apps by spend in the US monetised through in-app subscriptions in 2019. On iOS, this was higher at 94 per cent. 

With major players in the industry working together to create IoT standardisation, the industry is primed for growth. By 2025, there will be 25.2 billion connected devices, up 177 per cent from 2018. 

Mobile gaming is the world’s most popular form of gaming 

Mobile games in 2019 saw 25 per cent more spend than in all other gaming combined. Mobile gaming extended its global lead in consumer spend to 2.4x PC/ Mac gaming and 2.9x home game consoles in 2019. Mobile has democratised gaming, allowing for a portable gaming console to be in the pocket of nearly every consumer. Mobile gaming is on track to surpass $100 billion across all mobile app stores in 2020. 

Casual arcade games contributed 47 per cent of games downloads. Games within Casual genres, led by Arcade and Puzzle, were the most downloaded globally in 2019. Since users tend to switch between multiple Casual Games, many companies leverage a portfolio of Casual Games to retain high user bases overall. Publisher Good Job Games had a breakout year with multiple Casual Games topping the charts. Fun Race 3D ranked #5 by global downloads in 2019, despite only launching in May. Core Games represented almost one-fifth of global downloads. Free Fire was the most downloaded Core Game of 2019, falling under the Action subgenre. 

Core games represented only 18 per cent of downloads, yet 55 per cent of time was spent in top games. 

Core Games tend to drive deeper engagement and longer gaming sessions. Mobile devices have made strides in power and hardware capabilities, enabling Core Games to flourish. 5G will make it even easier to play Core Games on-the-go. 

Increasingly, games incorporate gameplay and design elements across genres. It’s important to analyse deeper gaming category information to understand this hybridisation and how to leverage it. 

Within Core Games, Action represents the biggest portion of time spent. In 2019, PUBG Mobile was the #1 Action Core Game by time spent on Android phones globally in 2019. Among Casual Games, Puzzle Games saw the most time spent in 2019. Anipop was the #1 Casual Puzzle Game by time spent, representing 10 per cent of all time spent in the top 100 Games. 

Core Games made up 76 per cent of spend, echoing the growing shift towards core gaming in western markets. 

Companies increased spend on branding ad campaigns in games 

Games have historically been used for performance advertising, but companies are increasingly running branding campaigns in mobile games. In November 2019, for every dollar a brand DSP spent on MoPub’s exchange, about 74 cents went to a gaming publisher – a 19 per cent increase year over year. 

One major factor that makes gaming inventory effective for brands is that it offers engaging formats like full screen video. On MoPub’s exchange, the average rewarded video completion rate in games was 93 per cent in November 2019. MoPub has seen brand spend increase on video by approximately 180 per cent year over year in November 2019. 

Mobile-first companies saw 825% higher average IPO valuation 

Mobile-First Companies Saw 825% Higher Avg IPO Valuation. The 3 largest initial public offerings (IPOs) in 2019 were companies with mobile as a core focus of their business: #1 Alibaba Group ($167.6 billion), #2 Prosus & Naspers ($100 billion), #3 Uber ($82.4 billion). 

Mobile-focused companies had a combined $544 billion valuation, 6.5x higher versus companies without a mobile focus. These are further indications that mobile is essential to succeeding with customers in 2020 and beyond. 

Mobile – the go-to device for entertainment 

Globally, consumers spent 50 per cent more sessions in Entertainment apps in 2019 than in 2017. The ever-growing adoption of video streaming apps on mobile devices to watch movies, TV shows, and live events on-demand helped bolster demand for Entertainment apps. 

High quality streaming, growth in user-generated content, and offline mode becoming standardised were industry advancements that helped tip the scales from screen size to on-the-go viewing. Competition in the video streaming space will bolster better user experiences to drive growth in downloads, usage and revenue, and ultimately lead to partnerships and consolidation to win the wallets of consumers long term. 

TikTok and Disney+ carve into crowded US video streaming market 

The entrance of Disney+ into the video streaming space – with Netflix, Amazon Prime Video and HBO Now as incumbents, AppleTV+ as a new entrant, and HBO Max and NBCUniversal’s Peacock set to launch in 2020 – has dialed up competition. 

Nearly 25 per cent of Netflix’s iPhone users also used Disney+ in Q4 2019, its highest overlap of users among top video streaming apps in the US. 

TikTok saw the greatest 2-year growth in cross-app usage of Netflix at over 135 per cent, indicating that competition in the video streaming space is heating up not only by traditional companies launching standalone streaming services, but from social media companies carving new mobile-first consumption pathways. 

TikTok Tidal Wave: Time spent exceeded 68 billion hours in 2019 

TikTok has grown to become both a social networking app and a source of entertainment, showcasing short, user-generated videos, often featuring lip-syncing or comedy. Musician Lil Nas X’s “Old Town Road” started as a meme on TikTok and went viral on the platform, landing at #1 and breaking Billboard Hot 100 records. 

Global time spent in TikTok grew 210 per cent year over year in 2019, both from expanding user bases and increasing time spent per user. TikTok’s advertising platform positions this engaged and growing audience for brands to reach through videos designed to show value and entertain. Eight of every 10 minutes spent in TikTok in 2019 were by users in China, but the app’s usage has also skyrocketed in other markets. 

YouTube Music used cross-promotion to attract 77 million active users 

YouTube Music saw 980 per cent growth in worldwide active users from December 2017 to December 2019. Cross-promotion across other properties (for example, YouTube) helped grow the user base – along with strategic global expansion. 

YouTube Music focuses heavily on music discovery, including recommendations and playlists based on location, taste, and time of day. On Android phones in the US, YouTube Music skewed male at 70 per cent of its user base, 1.3x more than Pandora and 1.2x more than Spotify. 

Gen Z has 60% more sessions per user in top apps than older demographics 

98 per cent of Gen Z (born 1997 - 2012) report owning a smartphone. Gen Z is expected to surpass Millennials as the largest generation by the end of 2019, comprising roughly 32 per cent of the population. 

Gen Z spent 3.8 hours per app per month per user among top 25 non-gaming apps on average; while 150 sessions were recorded per app per month per user among top 25 non-gaming apps on average. 

App Annie stresses that it is imperative to win Gen Z on mobile, or risk missing out on a mobile-native generation of consumers.