App Annie just released Google Play their download and revenue report. The title of their blog post that announced the availability of the report was “Google Play’s Phenomenal Growth”. Let’s check this.
Both App Annie and Distimo have regularly released reports in the past. I commented on the most recent report in this blog, and have also commented on previous reports.
First let’s look at a graph from an App Annie / IDC report dated Feb. 26, 2014. By comparing Google Play revenue (in this case limited to games) between 4Q12 (roughly 30) and 4Q13 (roughly 130), we see that annual growth was 430%. This is much much more than the 2.4x (240%) reported for 1Q13 vs. 1Q14. Hence we can say that on a ratio basis, Google Play growth has actually slowed down.
Now attentive readers might have noticed that the current report is for all app categories, while the older report was for games. However App Annie has also mentioned that games represent 80-90% of Google Play revenue. Therefore using all category revenue and game category revenue interchangeably does not significantly change the numbers.
However, given Google Play’s rapid growth, it is rather unfair to compare the ratios early in the game to later ratios. We should also look at absolute growth. Since App Annie hides the raw data behind an arbitrarily indexed revenue score, we have to again resort to reverse-engineering their charts.
Looking at the above chart, we can see that 1Q13 was roughly 60 on the Y-axis. Multiplying that by 2.4, we get 144. If we were to extend the above graph and plot 144 for 1Q14, we would see growth in absolute terms actually slowing down. 4Q13 (roughly 130) – 3Q13 (roughly 100) = 30. 1Q14 (roughly 144) – 4Q13 (roughly 130) = 14. What we see is a huge slowdown on a sequential absolute growth basis (30 vs. 14).
Now since these numbers have been reverse-engineered and they also contain ambiguity due to all categories vs. games, I do not intend to conclude that there was a huge slowdown. I simply want to bring attention to the possibility that a slowdown may have happened.
To further understand the character of Google Play growth, you have register your email with App Annie, but you can download the full report for free. Inside this report, you will see that Google Play growth is still completely reliant on Japan, US and South Korea. Even large wealthy economies like Germany which also has a high Android marketshare have minuscule Google Play revenue compared even to South Korea.
The problem is, the lopsidedness of Google Play revenue is likely to limit future growth. Android market share itself is growing in the less-wealthy nations and is flat or decreasing in markets like Japan or the US. If Google Play revenue continues to rely on these countries, growth may soon trail that of the iOS App Store, the figures for which are likely to be released from App Annie quite soon.
Naofumi Kagami 