App Annie, one of the tech industry’s most important sources for tracking app trends and performance across the globe is leveraging its extensive data to make predictions for the global app landscape in 2016.
App Annie is one of the tech industry’s most important sources for tracking app trends and performance across the globe. For the first time, the firm is leveraging its extensive data to make predictions for the global app landscape in 2016.
Danielle Levitas, App Annie’s senior vice president for research, shared key insights from the company’s just-released report at Infinity Ventures Summit in Kyoto today and sat down with Tech in Asia to elaborate on her predictions for Asia.
Here are five things to keep an eye on in the coming months, from App Annie’sTop Predictions of 2016 report:
1. Asia’s ‘platform messengers’ will continue to lead in terms of average sessions and time spent in-app – but watch out for Facebook
Asia’s ubiquitous messaging giants offer more than cute stickers – they’ve evolved into all-encompassing wonderland of services in a bid to keep users in-app. Line and WeChat now offer ecommerce marketplaces, taxi hailing, games, and much more.
“[They] started as messengers and turned into platforms,” Levitas tells Tech in Asia. “There’s a dramatic difference between Asian and Western messaging apps, but Facebook wants Messenger to become a platform as well.”
App Annie predicts that average sessions per user will increase “incrementally” in western markets, but continue to trail competitors in Asia.
“Asian messengers have more than two-times as many sessions, and that means more opportunities to ultimately monetize,” she continues.
2. Move over in-app purchases, subscriptions are the new hotness
Speaking of monetization, App Annie expects to see more loot coming from subscriptions, following the strong performances of music streaming apps, HBO Now’s on-demand video service, and dating kingpin Tinder’s premium “Plus” tier.
“In-app purchases have traditionally been a fantastic revenue driver […] but what we’re starting to see, and expect to see more in 2016, is subscription revenue through the app in the form of premium services and content,” Levitas says. “Dating apps, especially, have seen significant increases in subscriptions over the past year.”
More broadly, in-app advertisements are also set for a boost. Safari ad-blocking in iOS 9 is expected to push mobile ad publishers (at least those targeting iOS) deeper into the app ecosystem, which could translate to dollar signs for app publishers that rely on ads.
3. VR and AR will be big in Asia, especially Japan – but it’s still in the ‘hype’ phase
Asia’s rich gaming culture will likely translate to early adoption of virtual and augmented reality.
“Core gamers, especially Asian gamers, have proven to have a propensity for buying things before the general population does – broadband subscriptions, high-definition TVs and monitors, advanced peripherals,” Levitas says.
Samsung’s tie-up with Oculus is noteworthy, but she predicts the Japanese to dive into virtual worlds first.
“Japan has always been a country that adopts new technologies faster than other parts of the world,” Levitas says. “The Asian market, and specifically the Japanese market, wants virtual reality.”
She notes that mass adoption is still a few years off, but “hype” for VR and AR will continue to increase in 2016.
4. Consolidation coming to the crowded O2O space
App Annie’s new report says that the last two years represented the “innovation phase” of the online-to-offline (O2O) ecommerce industry. Growth breeds competition, and in the ecommerce world, competition often drives down prices. That’s great for consumers but it creates a spike in user-acquisition costs for ecommerce companies.
Asia’s crowded O2O market, App Annie predicts, is ripe for consolidation in 2016. From the report:
“This trend is already in its early stages as major acquisitions have occurred in transportation (Didi-Kuaidi merger), ecommerce (Snapdeal’s acquisition of FreeCharge), food delivery (Foodpanda’s acquisition of Just Eat India), and even local services (Meituan-Dianping merger). We believe that industry consolidation will foster manageable customer acquisition costs, sustainable unit economics, higher quality app usage, and a healthier ecosystem.”
Beyond O2O, Levitas believes that consolidation could also hit other verticals.
“The game space is constantly evolving, with new upstarts getting bought by big publishers – just look at Activision and King.”
For Japan’s notoriously RPG-heavy domestic gaming market, she says that acquisitions could help domestic publishers enter genres that are popular in foreign countries.
“If you think of arcade-style games, casino games, they do really well in North America and you don’t see them here,” Levitas adds. “In order to grow revenues outside of the home market, acquisition makes sense if you buy into genres that aren’t germane to the local market.”
5. All eyes on India
OK, we get it – India is hot, hot, hot right now. App Annie’s excitement adds substantial fuel to the fire.
“Globally, the market that we’re really focusing on is India. There’s been a lot of stagnation in mobile phone adoption in more mature markets, but India has had phenomenal growth,” Levitas says. “Given the sheer size of India, and with [smartphone] penetration still so low, it’s going to be an exciting market to watch.”
She points to fintech, news, and education as potentially hot verticals.
“Connecting individuals from a business and finance perspective, helping the average consumer get access to news and educational resources – the need-based market will evolve alongside the want-based app economy.”
This piece originally published on Tech in Asia