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Through the Magnifying Glass: USA

Date

07/12/2020

Written by

Airnow

The United States is the world’s economic leader, and it’s no surprise that it also has one of the most lucrative app markets in the world, with a predicted worth of $36.92 billion in 2020. Today, American app developers and publishers continue to drive mobile app innovation. It is, after all, the home to the creators of Facebook and Google and all their sister companies, which alone possess the lion’s share of the most used and downloaded apps worldwide.

But with China's emerging presence as a global power, has America been knocked off its perch as a global leader in the app ecosphere?


The State of the U.S. App Market

Domestically, the app market in America has never been bigger, with more than 275 million smartphone users. In line with the overall growth of the smartphone market worldwide, smartphone penetration in the United States has continually risen over the past ten to fifteen years to more than 80% today in 2020. Revenue from smartphone sales has also grown over this time period, with annual sales reaching 79 billion U.S dollars. The effect of quarantine and remote working have only exacerbated this upwards trend. According to Forbes, Americans are spending more time on their mobiles than ever before. In April, the average user spent a quarter of their waking time on their mobile device. This has had a domino effect in terms of sales, with consumers increasing the amount they spend on mobile apps by around 25%: $50 billion in the first half of 2020.

In America, people are spending more time on their phones, and spending more money on apps than television. But while apps are the new prime time, games have certainly grabbed the limelight.

US Mobile Gaming Statistics

Generally speaking, Asian countries dominate the mobile gaming industry. Period. Interestingly however, and contrary to popular belief, in recent years the US finds itself not as far behind as one might initially suspect.

As of 2018 there were approximately 2.2 billion mobile gamers worldwide, with Americans making up around 202.8 million of that figure (more than half of the country’s population). Today, the total number of U.S. mobile gamers is around 213 million.

Like everywhere else in the world, the COVID-19 pandemic has seen massive spikes in mobile gaming, causing an increase in installations across the top genres including hypercasual, puzzle, simulation and lifestyle.

Throughout the USA’s lockdown period, revenues in USA’s mobile games market were at record highs, peaking in May 2020 at $1.9 billion before states started to ease lockdown restrictions and downloads started to slow down.

The hyper-casual genre is at the forefront of the mobile gaming industry globally. In fact, three of the top five grossing games during Q2 2020 were hyper-casual games: Roblox, Candy Crush, Coin Master. This is likely due to the highly engaging, addictive, and easy-to-play game-play of the genre, something which appeals to an extremely wide audience. Note that the vast majority of hyper-casual games get their revenues from ads, which makes their dominance even more impressive when looking at the statistics.

Spending

In October alone, Roblox generated over $92 million dollars in global revenue. Coin master has a global revenue of around $130 million, while Candy Crush Saga (still cashing in today even eight years after release) boasts global revenues of around $70 million.

The vast majority of the spending on all of these games comes from the USA, and this is not a new trend either. In a survey assessing the spending per capita on apps according to countries between 2012 and 2017, Americans were the third highest spenders (92$) preceded only by Australians ($114) and the Japanese ($214).

Competition?

The United States is not the only country experiencing exponential growth in its app markets. In fact, recent estimates show that China’s app market is even bigger than America’s, with revenues of $40.85 million, compared to the USA’s $36.92 million. A report from Niko shows that in 2019 China had 637.1 million mobile gamers (this is a greater sum than the whole American population, and this number is predicted to rise to 737 million in 2024.

These statistics indicate that China represents a very real threat to America’s hegemony in the app market and the competition in this ecosphere is symbolic of the broader competition between the two nations.

‘The next billion users’

While there are clear business implications for the respective countries winning over emerging countries app markets, there are also less overt obvious factors at play. Much like the power struggle for hegemony by competing superpowers during the Cold War, the US-China technology competition isn’t taking place in either country. Instead, it is playing out in dozens of developing countries around the world where American and Chinese technology companies are competing to win over what they call “the next billion users." The implications will have a major impact on geopolitical competition and the future global technology landscape.

Although it may seem insignificant at first glance, for a Brazillian youth, deciding between Tiktok or Instagram, is in microcosm, a crucial battle of two superpowers.

China vs. US Market Share of Top 10 App Downloads in 2015 and 2019

In countries such as Brazil, India, Indonesia, Egypt, Mexico and Nigeria, American and Chinese apps are battling it out to dominate the market. Market share in this context refers to the percentage of total downloads out of the top ten non-gaming apps in each country). At the moment, American apps are still dominant, however, there have been some serious advances in the past four years by Chinese apps. Take Brazil for example. In 2015, Chinese apps represented just 5.22% compared to America’s 74.25%. Yet, just four years later in 2019, Chinese apps saw a jump to 15.97%. The same pattern can be seen throughout a number of emerging markets.

Top Ten Most Downloaded Non-Gaming Apps in India, 2015 vs. 2019

The gains made in Brazil may feel marginal, however, it demonstrates that the American hegemony is far from unshakeable, and when you look at the story in India the picture becomes even more interesting.


In 2015 China held 23.97% of the market share of India’s apps market, while America held around 61.64%. In 2019, Chinese companies were responsible for a staggering 60.56% of the market share, while American companies lagged behind with 31.04%.

“So what? This is just in one country”, you may be thinking. But this would be a massive underestimation. Due to the size of the Indian market, (read more about the Indian market here), the gains made by Chinese apps in India means that it has been brought to near parity with the US in terms of total app downloads across Brazil, India, Indonesia, Egypt, Mexico and Nigeria (49% for the US apps vs 42% for Chinese apps).

Another interesting point is that US dominance in the app ecosphere is heavily reliant on a single company: Facebook. Facebook’s four apps (WhatsApp, Messenger, Facebook and Instagram) take up a whopping 87% of US market share of the top ten apps in these markets.


As we can see, the American market is still one of the biggest markets in the world. Not only are Facebook’s and Google’s apps world-dominating, the average consumer in America is willing to spend a great deal more than the vast majority of other countries. These two factors seem to suggest that it is unlikely we will see America being knocked off its perch anytime soon.

But the lead is far from invincible, and the competition posed by China may cause America to start looking over its shoulder ever more often as time goes on.

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