Google Play widens download lead over App Store, but Apple still wins on revenue

Although Apple's App Store still dominates app store revenues, Google Play is closing slowly but surely catching up.
Written by Liam Tung, Contributing Writer

Google Play has significantly widened its lead over Apple's App Store when it comes to app downloads, but Apple's store still dominates app revenues.

There were 60 percent more app downloads from Google Play than the App Store in the third quarter of this year, compared with Google Play's 25 percent lead at the same time last year, according to the new report from app analytics firm App Annie.

But volume doesn't mean money and Apple still rules when it comes to revenue, which was about 60 percent higher than Google Play revenue for the quarter. App Annie counts paid downloads and in-app purchases, but not in-app advertising, which accounts for an estimated 14 percent of mobile app store revenues in 2014, according to analyst firm Gartner.

The good news for Google, which like Apple retains a 30 percent cut of app revenues, is that courtesy of games, it's also closing the revenue gap on the App Store. At the same time last year, App Store revenues stood at more than double the revenues on Google Play. 

All of this matters a lot for developers trying to decide their priorities when building apps. Right now developing for iOS appears to be more lucrative so many will develop for that first — but Google Play continues to narrow the gap that could make it less of a clear-cut decision.

According to App Annie, games continue to be the biggest money spinner on Google Play, with notable increases in earnings in the US and South Korea where games were almost solely responsible for revenue growth in each market. Finnish-made game Clash of Clans, which makes most of its cash through in-app purchasing, was a key source of growth on Google Play in both the US and Korea.

An earlier report from App Annie showed that games accounted for 90 percent of Google Play revenue in Q1, 2014. Within that, 'freemium' app revenue accounts for 98 percent of worldwide revenues.

Reflecting Facebook's popularity and its decision to herd users worldwide over to its Messenger app, it became the leading app downloaded in the quarter across both stores. 

The big driver behind growth in downloads on Google Play were Android users in Brazil, India and Indonesia — three markets that handset makers are paying increasing attention to, with efforts particularly in the latter two markets to boost smartphone adoption with better devices at lower prices. By contrast, the biggest sources of revenue on Google Play were Japan, the US, South Korea, Germany, and Taiwan. 

Given Google's recent launch of Android One in India, which aims to deliver a $100 smartphone, download growth from emerging markets is likely to continue, with Google planning to launch it in Indonesia, the Philippines, Pakistan, Bangladesh, Nepal, and Sri Lanka before the year is out.

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