Lost Your App-etite? The Reasons Why Consumer App Downloads Are Decreasing

It would appear to seem obvious to everyone but app developers that the law of diminishing returns must eventually apply to the ever increasing number of apps - in the millions and counting. The bigger problem the industry faces that eventually is now.

90 percent of consumers say they never pay for an app download. The number who don't download any apps whatsoever has climbed from 20 percent to 31 percent and appears to be rising.

The impetus for this trend is apparent: the world is awash in smartphones. Those who dont have them are either about to get them - or off the grid. And, as the following article explains, the growing sophistication of the user base means that they know what they need or want and probably already possess it. A new app break through would have to be extraordinary and so fiffereniated from the mass as to constitute a technological revolution.

So, the developers are being squeezed on both ends: by an increasingly disinterested customer and by shrinking app store access driven by the companies' desires to drive more revenue to their own interests as well as a growing consciousness that this is a saturated market whose future returns appear limited if not terminal. The space they control is simply too valuable to be wasted on mindspam no one wants.

The larger question is what this may portend for the tech industry. This most certainly does not signal some sort of tech cataclysm nor does it imply anything negative about the future of mobile. In fact, there are those who believe this is a good thing: that app development was an evolutionary dead-end, an amusing but ultimately superfluous distraction. That may be too harsh a judgement, but then history is the study of what has actually happened, not what anyone wishes might have happened. JL

Daniel Thomas and Tim Bradshaw report in the Financial Times:

Each additional new smartphone [owner] has less inclination to download apps, either out of apathy or, at a more global level, affordability. Ironically the better that apps get the longer people will keep them meaning people feel less inclined to look for new apps

Smartphone owners’ waning appetite for new apps is casting a shadow over what has been a technology market hotspot and is fuelling mobile developers’ concerns that their best days of growth are coming to an end.

Almost a third of smartphone users do not download any apps for their devices in a typical month, according to a report by Deloitte that predicts the volume of app store sales is hitting a ceiling.The average number of apps downloaded on a monthly basis has decreased considerably in 2014, the firm found in a survey of people in the UK. As smartphones saturate mobile markets in the US and Europe, developers must rely on customers continuing to download new apps for their businesses to grow.

“We are reaching a limit in the UK in the volume of app store downloads,” said Paul Lee, analyst at Deloitte. As an early adopter of smartphones and home to many top developers, the UK has become a bellwether for the rest of the mobile industry.
Almost nine in 10 people also say that they never spend money on apps or other smartphone content, which will raise questions that the size and profitability of the mobile market for games makers and other producers of mobile media.

The study follows quarterly results from King Digital Entertainment last week which showed customers’ spending on its hugely popular mobile game Candy Crush Saga had declined faster than expected, while its other games were failing to make up the difference.

Apple and Google have both published studies in recent months claiming that their app stores support a considerable industry of developers in Europe. But Deloitte’s findings come amid growing concern among independent developers around the world about the financial health of the app economy, where a small number of software and internet companies make up a growing majority of downloads and profits.

However, Mr Lee said the findings did not mean the size of the app market itself was shrinking, as much as there was an increase in more “casual users” who use fewer apps in a larger smartphone market.

Each additional new smartphone [owner] has less inclination to download apps, either out of apathy or, at a more global level, affordability. Ironically the better that apps get the longer people will keep them meaning people feel less inclined to look for new apps - Paul Lee, Deloitte

The number of smartphone users who do not download any apps has reached 31 per cent, a steep increase from less than fifth in a similar survey last year. For those that have, the mean number of apps downloaded has fallen to just 1.82, from 2.32 last year.
“Each additional new smartphone [owner] has less inclination to download apps, either out of apathy or, at a more global level, affordability,” Mr Lee said.
Many smartphone users also now have the primary apps that they require given the maturity of the market.
“Ironically the better that apps get the longer people will keep them meaning people feel less inclined to look for new apps,” he added.
Deloitte’s survey comes at a time of intense debate among independent app developers about the future of their industry. The sheer volume of apps available, now running into millions, and the hit-driven nature of the app stores has made it harder for developers to gain visibility for their new releases.“In the early days you had fewer people with phones but it was easier for apps to be discovered,” said Stuart Hall, the founder of Appbot, an app analytics service, and the creator of several apps. He adds that the market has got “a lot tougher” for independent developers, who create the vast majority of the apps available, as most apps are now free to download rather than paid upfront.
“If you are not in the chosen 200 or 300 [top apps] it’s very hard to make money in a substantial way on the app store,” said Ouriel Ohayon, chief executive of Appsfire, a mobile advertising technology company.