Estimated Total Value of App Store Market
AdMob has just issued a report with some very interesting data on the app store, and one of their claims is that the app store market is worth about US$200M per month.
This is disputed as being an unreasonably high estimate by some commentators. However, with data I have gathered from my own app sales, I am in a position to make my own estimate too. So what is it? Well there are four steps.
Step 1 – Sales Versus Rankings
In an earlier post I showed a graph of sales versus rankings for Oz Weather in the Australian app store during the first few months of 2009. Below is an updated graph covering the sales period July/August 2009.
Although Oz Weather hasn’t ranked highly enough to provide data points within the top 10, it does still allow a good estimate of the curve as a whole ie.
Daily Sales = 1800 * Ranking ^ -0.8
Note that this curve is substantially higher than the 6 month-old estimate, showing a large increase in the overall number of app sales per day – of the order of a factor of 2 or more.
Step 2 – Find area under the curve to give total daily app sales
The area under this curve is the integral of the curve formula. With some high-school calculus, we might know that this is:
Area under curve = 1800 * (Ranking^0.2 / 0.2)
Solving this for the range 0 to 50,000 apps (the approximate number of paid apps available) gives the result:
52,000 app sales per day in the Australian app store
Step 3 – Multiply by average app price
Assuming an average app price of US$1.80 (AUD$2.25) the total daily revenue for the Australian app store alone is
- AUD$120k per day
- AUD$3.6M per month
- AUD $42.7M per year
Step 4 – Expand to whole Globe
I have previously estimated the Australian market to be about 1/30th of the global market size. However, the AdMob report indicates about 45M iPhone/iPod Touch devices worldwide, and previous research has implied about 1.1 million in Australia, implying a ratio of about 1/40. In that case, the corresponding global sales figures would be
- US$3.9M per day
- US$115M per month
- US$1,370M per year
Although there are a number of estimates and assumptions involved in these calculations, the final monthly number of US$115M per month, although less than AdMob’s estimate, only differs by a factor of a 0.6.
A more accurate estimate would be possible with a wider range of app versus ranking data – especially from the larger app stores like the US. However, I did previously collate some data like this, and it also supported a rankings/sales tail off with a power factor close to -0.8.
I conclude that my own app’s sales figures imply that AdMob’s estimates are very plausible, and certainly likely to be in the correct ballpark.