App Annie opened up its 2017 mobile app trend prediction in Asia Pacific by stating that it’s going to be a “phenomenal year” for the app economy.
“By the end of the year, we expect US$52 billion in gross consumer spend on mobile app stores and a staggering US$77 billion in gross spend on mobile in-app advertising,” explained Junde Yu, Managing Director, App Annie Asia Pacific, in the report.
He also explained that not only apps have become primary revenue drivers for digital businesses, but it will also play critical role in strengthening traditional business models in industries like retail and food service. The report give an example of food delivery services such as UberEats, Deliveroo, and Foodpanda, which are predicted to experience an uptick in 2017 (despite the fact that this year Foodpanda had ceased operation in several key Southeast Asian markets).
So what is going to happen next year? Check out the following video and let’s discuss the highlights from the report:
Let’s start with the numbers
When it comes to numbers, the prediction is fantastic.
“We forecast that gross mobile app revenue, including app store spend and advertising spend, will hit US$166 billion in 2017,” Yu said.
Gross consumer spend on mobile app stores will constitute US$65 billion with games continuing to become primary driver of this revenue, though subscription revenue from dating and media streaming apps will grow faster. Meanwhile, gross in-app advertising spend –as received through social media, video platform, and games– will account for US$101 billion.
Not only that users are spending more money on these mobile apps, they are also spending more time in it, which likely to be the driving force behind the increase of spending.
“Time spent in shopping apps was up 52 per cent year-over-year on Android phones worldwide excluding China, during the first three quarters of 2016 largely due to growth in mobile commerce. While mobile commerce growth will moderate in 2017, we expect to see a second wave of growth from brick-and-mortar retailers as mobile apps reinvent the in-store experience,” Yu explained.
Who will disrupt TV?
Surprise, surprise! The answer is not Netflix, as the report stated that premium subscription services will find it difficult to replace the existing TV paradigm by themselves.
“This balance of power will shift in the coming years thanks to the growth of short-form and live video, YouTube, Facebook, and Snapchat are on path to disrupt traditional TV. It will leave less time available for terrestrial TV, particularly among younger age groups,” Yu explained.
We will not be talking to machines soon
The first counter-argument will be the very existence of on-demand economy itself. The report stated that food delivery and ride-sharing apps only exist because they remove friction, for example by replacing conversation with a graphical user interface (GUI).
“Chatbots will still play a role, but at least in 2017, artificial intelligence capabilities are unlikely to be sophisticated enough to carry on complete customer service conversations. Chatbot use cases will remain limited to notifications and routing users to the right human touch points,” Yu said.
Similar destiny will be faced by voice search. While the release of services such as Google Assistant was believed to help increase voice search queries on mobile, it will fall short of a large scale shift in app interaction patterns. The report believed that it is because existing touch-based interactions are already deeply ingrained and unlikely to shift at this point in the maturity cycle.
“We estimated that voice interactions accounted for approximately 1.2 per cent of total smartphone sessions on Android phones in August 2016. Even with meaningful growth in voice search, we expect voice interactions to remain well under two per cent of overall smartphone sessions,” Yu said.
At the other hand, traction will be gained by on-screen suggestions based on the same underlying AI instead.
Instant App, the next best thing since instant noodles
The report considered Instant Apps, which enables access to Android apps without requiring a download, as “among the most important announcements” at this year’s Google I/O.
Though developer adoption will happen gradually, and will be led by apps that are used less frequently, the feature will become more powerful thanks to a concept called “dsitributed discovery.”
Also Read: 6 foolproof ways to scale up your startup in 2017 and beyond
“Rather than relying on app stores as a single point of discovery, Google has been enabling discovery across its properties … Google Maps is increasingly becoming a source for app discovery with deep links to ride-sharing, hotel booking and food delivery services. In addition to this, Google Nearby sends app prompts when users are in the vicinity of a local business or retail store. And finally, Google search, Google Now and Google Assistant recommendations all target app discovery in different contexts,” Yu explained further.
Niantic to go beyond Pokémon GO
Despite having started to show signs of slowing down, Pokémon GO remains a game-changer for its company Niantic.
In fact, the report stated that Niantic will become somewhat immune to a problem that is faced by many game developers, which is the appearance of clones of their successful products. This is because Niantic’s location gaming platform is based on a “valuable technology stack (on top of Google’s Maps and Places API)” and millions of
user-submitted locations from their previous game Ingress players.
The report believed that it gives Niantic “the first structurally defensible business model” in gaming.
“At least in 2017, we believe the only new location-based augmented reality (AR) games will come from Niantic themselves in partnership with other IP owners. Pokémon GO itself will see engagement normalise to an extent, but with significant bumps during periodic in-game events and major feature additions,” Yu said.
He also predicted that more retail companies will sign up for Niantic’s AR-based sponsored location program to drive store traffic.
“In 2017, we expect many more industries like retail, banking and entertainment toexperiment with smartphone AR, particularly those that rely on a physical presence,” he concluded.
The new reality
Apart from the increasing use of AR in mobile apps and various offline businesses, the year 2017 will also see the adoption of mobile VR accessories (i.e Gear VR, Google’s Daydream Viewer) outpacing PC-based VR devices (i.e HTC Vive, Oculus Rift). It is driven by significantly lower ownership costs and a wider gamut of use cases.
For wearables technology, interests in smartwatches will not “live up to the hype” from a few years ago when the products was first introduced.
“In response, we believe OEMs and platform owners will shift investments over to smart glasses, from basic camera-equipped eyewear like Snap Spectacles to full-fledged AR platforms like Microsoft’s HoloLens. But with the underlying technology still immature, standalone commercial success will remain elusive in 2017,” Yu closed.
Image Credit: IKO / 123RF Stock Photo