Mobile app market to grow 270% to $189 billion by 2020, with games accounting for 55%

The mobile app market is expected to grow 270 percent — from $70 billion in 2015 to $189 billion by 2020 — according to a new report by market researcher App Annie.

Time spent in apps increased 114 percent from 2014 to 2016. By 2020, games will account for 55 percent of app store revenues. Other categories will also grow quickly, as time spent in shopping and transportation apps is expected to grow three-fold.

“Today, app publishers come from every industry — not just game studios and media and entertainment companies, but also banks, retailers, airlines, ride-sharing services, and government agencies, to name a few,” the report said. “To fully capitalize on the app economy’s exceptional growth, publishers need to anticipate future market opportunities when planning for a variety of business scenarios, including product launches, performance goals, international expansion, and portfolio management.”

By 2020, in-app advertising and app store revenue will each exceed their combined 2015 total. Both categories will see strong growth, yet in-app advertising is outpacing app stores, and the former’s share of revenue will expand from 58 percent to 62 percent. Two key factors driving this growth are the dramatic increase of time spent in apps (which has doubled over the past two years) and the doubling of the global installed base of smartphones and tablets to 6.2 billion in 2020.

While game publishers will continue to capture the majority of revenue, advertising will fuel apps publishers (excluding games), as their share of revenue climbs from 34 percent ($24 billion) in 2015 to 45 percent ($85 billion) in 2020.

By the end of 2015, Asia Pacific had grown larger than the Americas in terms of revenue, with much of this growth driven by China. By 2020, Asia will deliver more than $85 billion to publishers. However, the U.S. market’s maturity in advertising delivers high ad rates and more brand dollars. This, coupled with a higher percentage of app store revenue passed through to publishers, means the U.S. market will remain the single largest market for publishers, delivering $59 billion in 2020, compared to $54 billion from China.