China Overtakes US for Top App Store Revenues

Feature Image Credit: TechCrunch

According to App Annie: China has recently overtaken the US for App Store revenues. The ASO tool's data shows that China drove $1.7 billion in revenues in Q3, 2016, which was 15% above revenues from the US and an incredible growth rate from the prior period.

While games reportedly drove 75% of revenues (which is similar to the massive state of games in the US), App Annie indicated that the fastest growing, non-gaming categories for revenue in China were entertainment, social networking and – books.

Surging China revenues helped Apple drive record revenues from the App Store for November 2016, too. Apple App Store exec, Phil Schiller is certainly feeling joyous:

When using App Annie to compare which countries own market share in the top charts for the apps identified by headquarters country, in China:

• Only two non-Chinese apps made the top 100 free apps in China (YouLoft from Australia and Camp Mobile from South Korea Korean; Uber China was also on the list).
• 11 non-Chinese apps made the top 100 paid apps (only one American company).
• Only four made the top grossing list (Supercell from Finland, which scored two top grossing apps, DeNA from Japan and Blizzard from the US).

In the US, by contrast:

• A full 29 non-American apps made the top 100 free apps (Chinese apps scored four top 100 free spots: FT Games, Musica.ly and Cheetah Mobile, which scored two).
• Nearly 50% (48) non-American apps made the top 100 paid apps (including only two Chinese apps: Appxy and Gyro Games)
• 45 non-American apps made the top 100 grossing  list. China (Soar Dragon, NetEase, IGG, Long Tech Network and Camel Games) tied with Finland for the most non-American apps.

While top grossing company ownership of specifically Chinese apps vs the American apps is certainly not as large an imbalance as the US-Chinese trade deficit (pre-Trump, that is), the Chinese retention of their home market is impressive, and Chinese ownership of foreign top charts (and thus share of app revenues) will likely grow as Chinese companies embark on an international asset spending spree, fueled now by even more digital revenues from home.

What does this mean for American app companies? There are many implications of this trend, but the chief learning is that American and other international high-flying companies must figure out how to enter and succeed in China if they do not want to crash into a glass ceiling (just like the rest of the world had to succeed in the US to continue growing, as illustrated by the US's country-diverse top charts). For instance, mobile tech giants Facebook and Google, previously shunned in China, are now working hard to figure out how to survive in the Chinese market.

Unfortunately, Chinese companies have a strong competitive advantage in defending their home turf due to many reasons, such as an unfamiliar and unfriendly legal environment, and the advantages the Chinese government imbues companies of its own ilk with (just ask Google, Twitter, Uber, etc.). It sounds like blue skies ahead for Chinese app companies, and a thorny path of learning and struggle for all other companies, yet success for those who are able to figure it out.

The Bottom Line: App companies looking to continue growing internationally can no longer afford to ignore the red giant to the east, which has overtaken the US for total app store revenue.

Image Credit: App Annie

Original Source: Sarah Perez via TechCrunch.

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