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Sales from Apple and Google App Stores Seen Doubling by 2018, In-App Advertising to Triple

The shift from paid downloads to free ones with in-app purchases also continues, according to a new study being released on Tuesday.

Ina Fried

App revenue from the Google Play marketplace and Apple App Store is seen doubling by 2018, with in-app advertising expected to more than triple over the same time period.

That’s according to a new forecast being released Tuesday by App Annie and IDC. The same study found that revenue from both sources grew at a similar rate from 2013 to 2014, expanding 1.7 times.

“I would consider this projection conservative,” App Annie CEO Bertrand Schmitt said in an interview, noting that the company has consistently been revising its forecasts up over the past two years as revenue has exceeded expectations. The App Annie/IDC numbers look only at sales from Apple and Google’s marketplaces. That means it excludes sales from Amazon and Microsoft’s storefronts as well as the third-party stores popular in China.

While the study didn’t offer absolute dollars to go with its growth figures, Apple has said that its App Store generated $10 billion in revenue to developers last year, while Google has said it has paid out $7 billion to app developers over the past 12 months.

In addition to the overall growth, Schmitt said the industry continues to see a shift away from paid apps to ones that are free initially but offer in-app purchases.

The problem with paid downloads, Schmitt said is that “you pay once; you don’t pay twice.”

The mix between paying for apps versus advertising continues to vary greatly by country, as well. In-app advertising accounts for a more than two-thirds of revenue in India and the United Kingdom, for example, but less than a quarter in Russia and Japan.

App Annie

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