App Wars: Who buys the most, and why?

A recent report from mobile app statistics clearinghouse App Annie revealed that Japan is now the largest app market in the world, outpacing the United States. Combined sales generated from sales in Google Play and the Apple Store beat out the U.S.; in addition, their findings show that users are spending three times as much money on apps as South Korean app buyers. In addition, App Annie’s stats show that growth was fueled in part by wireless carriers billing customers directly for downloads from Google Play.  Key findings from the report:

1. The Only Major Country Where Google Play Vies With iOS on Equal Revenue Terms Japan bucks the platform revenue trend seen in most countries as far as platform revenue is concerned. In the last year, Google Play app revenue has caught up with iOS in Japan, compared to the rest of the world where iOS app revenue is well over double that of Google Play on an aggregate basis.

2. Sheer Majority of Game Revenue Growth Driven by Just Five Publishers It’s an astounding fact, but the game revenue growth that has catapulted Japan to the number one spot has been mostly driven by just five publishers. One of them is the messaging powerhouse LINE, one of them is Puzzle & Dragons maker GungHo Online.

3. The Growth Isn’t Over If 2013 was the year where Japan’s smartphone penetration caught up with the US, 2014 will be the year where it completely obliterates things. By next year, 62% of mobile phones in Japan will be smartphones (compared to 50% in the US) according to eMarketer. The impact this will have on app downloads and revenue is a mouth-watering prospect for businesses invested in that region of the world.

Smartphone adaptation

Over the past year, Japans’ app store average monetary spend for individual users has absolutely exploded, exceeding growth in any other global app market. One of the major factors influencing this growth is universal smartphone adoption; while Japan is definitely a mobile-focused society; their adaptation of smartphones has lagged behind other major mobile markets until 2013, when they caught up in a hurry:

"The adoption of smartphones is much faster than what we expected," said Peter Warman, chief executive at Amsterdam-based game data research firm Newzoo BV. "It's fueling further growth." In August, Mr. Warman had forecast that Japan's total mobile game revenue would come to around 26% of an estimated $12.2 billion in global revenue, while North America—although three times bigger in terms of the number of players—comprised only 25%. Mr. Warman's numbers on Japan now look conservative, he said, noting that revenues will likely be closer to $4 billion. Japan will likely remain the world's biggest mobile game market for at least another year, he said.” – “Japan tops world in mobile apps revenue”, The Wall Street Journal

Used to purchasing digitally

Japanese mobile users have been conditioned for a while to be very used to purchasing all sorts of digital content – movies, music, games, etc. – and this digital content market has been growing steadily upwards for the last few years:

“Japanese are accustomed to spending money on mobile phones,” said Hiroshi Naya, an analyst at Ichiyoshi Research Institute Inc. based in Tokyo. “If you see revenue per user for companies like GungHo, which distribute apps globally, Japanese users spend more than the rest of the world.” – “Japan passes U.S. as top app spender on smartphone penetration”, BusinessWeek.com

Social a big part of app success stories

How did certain app companies rise above the rest in Japan’s hot app market? One good example is GungHo Online with their breakaway hit Puzzles and Dragons. Downloads of this game are in the millions, with TV commercials greatly contributing to the incredible viral growth:

Japanese mobile users are heavily into social engagement as part of their mobile use, which in turn drives viral growth of these apps. One of the most popular social networking apps in the world is Japan’s Line, which has an absolutely astonishing growth rate:

“Driven by strong advertising support and celebrity endorsements, the app, which provides free IM and calling via smartphones, tablets and desktops, is now the world’s fastest-growing social network. It recently reached 50 million followers in just 399 days. In January 2013, Line’s total number of Japanese followers hit 40 million; and a whopping 60 percent of Japanese women in their 20s and 30s, Line's research shows, use the platform every day.” – “From Japan, the biggest social network you never heard of”, AdAge.com

Mobile chat apps like Line, WeChat, and Sina Weibo are dominating the Asian app market, as seen in this image from NextWeb:

Centralized app stores help to drive growth

Contrast this report from the Japan app market with centralized app delivery systems to the recent stats out of China on Android users. The lack of a centralized app store in China makes it difficult to obtain data on app purchase patterns, let alone make it easy for developers to enter the market:

Reports estimate that China’s game industry brought in $9.7 billion in revenue last year across all segments, and the figure could grow to $21.7 billion by 2017. However, a latest report released by Chinese Android app store Wandoujia – which monitors trends in China’s mobile market based on its downloads — notes that foreign games, even if they are popular in China, are losing out on potential revenue by linking up with Google’s billing system. Wandoujia estimates that more than 70 percent of Android smartphones in China lack Google Play services. This has led to Chinese users being unable to make in-app purchases when playing foreign games such as Clash of Clans, which use Google’s in-app billing system. -  “Foreign games in China lose potential revenue by using Google in app billing”, The Next Web

Global app markets are taking off

While it’s tempting to focus on the local app market, it’s important to widen your view as apps are stepping onto the global stage. What steps are you taking to make your app engaging in the Japanese app market, the Chinese app market, or any other market outside your own geographical area? 

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