App Annie, a leading app store analytics company, recently presented a report that highlighted the continued rise of social networking as a phenomenon. Just as social media has dominated the web for the last few years, it is now poised to have a significant impact in the mobile space, as the study revealed it to be the 3rd largest category of in terms of monthly app revenues in the iOS store, moving up 9 spots over the past year. This places the category just behind games and productivity apps, an impressive feat considering that it was in the 12th spot only a year ago.
Downloads for social apps are up 30% year over year (now representing 5% of all downloads in Apple’s app store) while revenue from those downloads has nearly doubled and now account for 3% of all revenue generated in the app store.
Led largely by messaging and dating app, the phenomenon is one that seems to be spreading across all regions of the globe, with Japan and the United States still in the lead but growth coming from outside those two countries.
And while growth in revenue is largely led by Japan and the US, China is proving to be fertile ground for growth in downloads, with companies like Tencent (which controls the charts for the country with no less than 5 of the top 10 social networking apps in China) becoming large new entrants in the market. As more iOS devices get distributed throughout China, expect that growth to continue. What is missing from the Chinese story, however, is strong positioning by a non-local player. It appears the early incumbents are all homegrown, with no western company making it in the top 10 in China.
Another interesting data point in the research is that while it is 3rd in terms of revenue, the social app category is 6th in terms of download, potentially pointing to the category being a richer area for revenue than popular photo & video apps (which come in at 4th in terms of downloads, behind games, entertainment, and utilities) and lifestyle apps (5th).
But the social media story on mobile is one that is closely tied to the one on the internet, with the most popular apps being related to existing web services. The top 10 is dominated by free apps from established players like Facebook (Facebook Messenger is #1 and the Facebook app is #3), Microsoft (sitting in 5th and 9th position with different versions of its Skype software), Twitter (at #4), and Pinterest (8th). Heavy promotion of the “Find my friends” app from Apple has led it to the #2 position in the latest rankings. Of the top 10, no company outside of Apple had an iOS-only approach, potentially highlighting the need for social apps to be multi-platform to succeed. A couple of years ago, Instagram had built a following by being an iOS only app but this model no longer seems to be enough to move an app in the top 10 for the category.
Downloads, however, do not equate revenue and the top 10 most downloaded apps in the category do not figure anywhere near the top 10 in terms of monthly revenue. The category is dominated by dating and communication apps that can be downloaded for prices ranging from $.99 to $4.99 and most of the players in the field are mobile-first companies, which seems to highlight that the way to mobile revenue may require a different profile than that to web revenue. Whereas the largest players on the web are seeing heavy downloads based on name recognition and a shift in user behavior to more mobile-driven experiences, it appears that those same players have not yet figured out how to mine the field in terms of revenue. Emerging players could become the target of acquisitions from those larger companies when they decide to seek out mobile specialists.