Though it may surprise die-hard movie fans, video games generate more money than movies. The Entertainment Software Association reports that, in 2010, video games, hardware and accessories made $25.1 billion in the United States. Box office receipts, on the other hand, totaled $10.5 billion, according to The Numbers Research Services. While estimates vary for 2011, the general trend remains the same and is unmistakable.
The mobile app industry appears to be headed in the same direction. Add-on programs for personal data assistants (PDAs) have existed for more than a decade, but third-party mobile apps became widespread and commonly used with the 2007 release of Apple’s iPhone. Now developers create apps for platforms including iOS, Android, BlackBerry and Windows Phone and, according to Pew Research Center, 46 percent of US adults own and use a smartphone.
How is it possible for a bunch of 99 cent applications to make more money than theater tickets at an average of $7.89? The answer lies in sales volume. In March of 2012, there were 617 million Android app downloads, 394 million iPhone app downloads and 79 million iPad app downloads, according to Xyologic’s Global App Download Reports 1.0.
While many apps are free for users, there are alternative revenue models from advertising or in-app purchasing, and some apps cost than 99 cents or more to download.
The mobile app market isn’t making as much money as video games or movies yet its profits are increasing. The mobile application industry made $6.8 billion in 2010 and is expected to make $25 billion by 2015, according to a MarketsandMarkets report.
Not all analysts report and forecast the exact same data. Forrester Research says that apps pulled in $1.7 billion in 2010 and estimate $38 billion by 2015. A report from Gartner says that mobile applications made $5.2 billion in 2010, a much higher estimate. Various types of proceeds, including downloads, in-app purchases, and revenue generated from ads can be used by analysts to judge app profit, which may account for some discrepancies in reported revenue.
It can take years to analyze economic data well enough to see a real pattern, and although research firms generate different conclusions, all reports agree, mobile application development is lucrative and will continue to grow.