Apps helped generated USD 187 billion worth of revenue in the European Union last year and supported 1.3-1.7 million jobs in all sectors, according to a study from ACT The App Association and prepared by Deloitte Finance.
For app developers, direct revenues amounted to EUR 86 billion. This includes EUR 23.3 billion in ad revenue, EUR 5.7 billion from paid downloads, subscriptions and in-app purchases, EUR 55.6 billion from contract work and EUR 1.6 billion from mobile commerce (out of a total of EUR 394 billion total revenue). Mobile games represented 67 percent of downloads, subscriptions and in-app purchases. The study also noted an indirect contribution of EUR 1.1 billion due to additional business and household consumption triggered by app development.
In general, the app economy added 0.4 percent in value to the EU’s GDP in 2019.
Apps reduce transaction costs and market entry barriers
Mobile app stores had a positive impact on the EU”s digital economy, by reducing transaction costs and market entry barriers. They also help increase competition, consumer trust and security.
Apps have “permeated” the way companies do business in many ways: firms now incorporate apps in the way they provide services for their clients, such as railway or airline booking. Some apps have developed specific features such as geo-localisation, acceleratometer, camera, touch screen, which have in turn enabled new services. Ikea Place for example uses augmented reality so that users can visualise furniture in their homes before purchasing.
There are now many pure players, or companies that have built their business solely on an apps. These include ride-hailing apps, and mobile games, such as Citymapper or Yuka.
Apps offer more choice and "increase well-being"
The study concluded that new products and services offered via app “increase consumer choice and their well-being.” Europeans spent 19 percent more on apps in 2019 that the year before, with the growth of the smartphone population showing that apps help consumers. Mobile-commerce now accounts for almost half of e-commerce in the EU. When given the choice, many people opt for services provided via apps.
Innovation will in the future come from apps
The study added that apps will in the future be even more part of our lives, in areas such as the internet of things (IoT), mobility, hybrid events, education and healthcare.
In interviews conducted for the study, several app developers said future innovation in apps will not come from hardware developments but from the software side. Also, 5G network will allow a higher connection density, enabling more devices into the IoT.
“The app economy has become essential in supporting economic and job growth across the EU,” the study said. It added that the recent coronavirus crisis has brought awareness of the importance of apps in everyday life, for public services like education and health. The value created by mobile apps in the economy is therefore expected to grow significantly over the coming years.
