App Store to eclipse worldwide box office revenues sometime this year

App Store revenues may become bigger than the entire worldwide movie-making business sometime this year, with both industries likely to hit the $40 billion mark in the near future.

Apple says users spent $300 million in purchases made on App Store on New Year’s Day 2018. During the week starting on Christmas Eve, a record number of customers made purchases or downloaded apps from the store, spending over $890 million in that seven-day period.

Following Apple’s announcement of record-breaking App Store sales during the lucrative holiday shopping season, analyst Horace Dediu ran some numbers, finding that App Store billings are now within spitting distance of global box office revenues.

Based on Apple’s data and the fact that over half a billion customers visit App Store every week, while taking into account Apple’s cut and assuming the current 33% growth rate for App Store, the revered analyst posted a few interesting observations:

  • The spending on App Store has been adding about $5 billion per year since mid 2011.
  • App Store billings to surpass global revenues for the film industry sometime this year.
  • App Store is becoming one of the largest enterprises in the world.
  • iOS economy may achieve the half trillion revenue rate in 2019.
  • Economic worth of App Store in 2017 was roughly $180 billion.
  • iOS enables about 50% to 60% of mobile economic activity.
  • $25 billion/year payment rate eclipsed the revenue of McDonald’s Corporation in 2016.
  • During this year iOS users will be spending about $100 million per day for apps. This was Google’s AdWords revenue rate in 2012.
  • Apps, the biggest component of Apple services, have helped that segment gross over $57 billion in 2017, passing Fortune 100 level (net of developer payments).

Dediu noted:

Even when considering this, one should keep in mind that the figures of revenue and payments to developers are only a small fraction of the overall app economy.

Apps sold to end users are a subset of all apps on the App Store.

There are not only free apps but also many apps which are front-ends to complex services which are monetized in various indirect ways.

In 2017 alone, developers made a whopping $26.5 billion, a 30+ percent increase over 2016.

“We are thrilled with the reaction to the new App Store and to see so many customers discovering and enjoying new apps and games,” said Apple. “We want to thank all of the creative app developers who have made great apps and helped to change people’s lives.”

Since its inception in July 2008, App Store has made it possible for iOS developers to cumulatively earn over $86 billion, and that’s after Apple’s cut, by making and selling iPhone, iPad, Mac, Apple TV and Apple Watch apps, games and stickers.

Apple paid the first billion to developers in June 2010.