All of 2016‘s Top Mobile Apps Owned by Google or Facebook, Highlighting Winner-Take-All Dynamic
The mobile app landscape has undergone a dramatic shift in recent years, with a small handful of tech giants now dominating the space. Nielsen‘s freshly released report on the most widely used smartphone apps in 2016 starkly illustrates this trend. Astoundingly, the top 8 apps of the year were all owned by just two companies: Google and Facebook.
A closer look reveals that these tech titans didn‘t develop all their chart-topping apps organically. Google Maps and YouTube, ranking at #6 and #7 respectively, came under the Google umbrella via acquisitions in 2004 and 2006. Facebook, meanwhile, bought the companies behind #4 Facebook Messenger and #8 Instagram in 2011 and 2012 for $1 billion and $19 billion, respectively.
App Market Stagnation Despite Soaring Smartphone Usage
These developments are unfolding against the backdrop of skyrocketing smartphone adoption. Nielsen found that 88% of Americans now own smartphones as of 2016, up from just 18% when the iPhone debuted in 2007. Globally, smartphone ownership has exploded from 1.57 billion in 2014 to over 2.3 billion in 2017, and is projected to exceed 3 billion by 2020.
| Year | US Smartphone Ownership | Global Smartphone Ownership |
|---|---|---|
| 2007 | 18% | N/A |
| 2014 | 75% | 1.57 billion |
| 2016 | 88% | 2.1 billion |
| 2017 | 92% | 2.32 billion |
| 2020 | 96% (projected) | 3.0 billion (projected) |
Sources: Nielsen, Statista
Paradoxically, however, people are actually downloading fewer apps than ever. A 2016 ComScore report revealed that 51% of smartphone users don‘t download any new apps in a typical month, with many citing lack of need or interest. The average user downloads less than 1 app per month.
Several interrelated factors are contributing to this app fatigue. Discovering appealing new apps has become an onerous chore, as app store search functionality remains primitive and first-page results are cluttered with clones and fraudulent copycats. Over 60% of users browse apps exclusively through the app stores‘ top charts, leaving little opportunity for indie developers to gain exposure. Compounding matters, installing an app consumes precious time, storage space, and cellular data, erecting additional barriers.
As users eschew new apps, they are consolidating their activity within the familiar confines of Facebook‘s properties. Each month, 1.65 billion people spend an average of 50 minutes per day on Facebook, Instagram, and Messenger – a figure that continues to climb steadily. Through its constellation of apps, Facebook is cannibalizing usage from the rest of the mobile app ecosystem.
Psychological factors are also at play. Studies have shown that humans experience a "paradox of choice," becoming paralyzed and dissatisfied in the face of too many options. Presented with millions of app choices, users default to tried-and-true standbys. The decline of the web as a content consumption medium is also driving users into the arms of a few dominant apps. Since 2015, more than half of all digital media time has been spent in apps, turning the likes of Facebook into self-contained internet portals.
Startup Struggles in a Mature App Economy
Given these dynamics, it‘s no surprise that breakout apps from fledgling startups have become exceedingly rare. Snapchat, which famously spurned a $3 billion acquisition offer from Facebook in 2014, stands out as the most notable exception. But beyond Snapchat, examples of indie apps achieving mainstream success in recent years are few and far between.
This is having a profound impact on the startup landscape. While global venture funding reached an all-time high of $140 billion in 2017, funding for mobile-first startups has plateaued. Investment tracking firm CB Insights found a paltry 65 mobile-first companies among its list of 4000 most promising startups. Founders are instead flocking to emerging tech niches like AI, blockchain, and IoT in search of greener pastures.
Even hugely prominent brands with vast resources are struggling mightily to get traction with their smartphone apps. Apple, which accounts for half the US smartphone market with its iPhone, managed to crack Nielsen‘s top 10 with only a single app: Apple Music, slotting in at #9. And there are serious doubts about Apple Music‘s staying power, with reports of lackluster subscription renewal rates after free trials.
To be sure, Apple has carved out a solid niche with platform-specific apps like iMessage, Notes, and Health, which come pre-installed and deeply integrated into iOS. But in terms of raw popularity, Apple‘s apps aren‘t even in the same universe as those of Google and Facebook.
Amazon, Netflix, Uber and other major corporations have fared somewhat better, with their apps often serving as gateways into their respective ecosystems. Users might also keep a handful of apps from banks, airlines, retailers and service providers on hand to interface with those entities. But beyond that limited selection, few see a compelling reason to venture outside the Google/Facebook app oligopoly.
Mobile Games: Grappling With Consolidation
While traditional apps struggle for attention, mobile gaming remains a seemingly unstoppable juggernaut, accounting for 80% of total app store revenues. But beneath that rosy topline figure lies a familiar story of consolidation and corporatization.
According to a 2017 Apptopia study, just 9 gaming companies generate nearly half of all mobile game revenue. Industry heavyweights like Supercell, Activision Blizzard, and Electronic Arts have vacuumed up talented studios and popular franchises left and right, crafting sprawling portfolios that utterly dominate the charts. The 20 top-grossing mobile games claim nearly 70% of all revenue.
Indie developers, meanwhile, face exceedingly grim prospects. Discoverability has become virtually nonexistent as the app stores are flooded with clones, reskins, and iterative releases from entrenched gaming giants. Costs of user acquisition have skyrocketed 400% since 2012, pricing out all but the most lavishly funded efforts. With customer loyalty harder to come by than ever, even well-executed titles routinely fall flat.
The most successful "indie" story of 2016, Pokémon Go, underscores the long odds of going it alone. Despite its aura of bootstrapped innovation, the game was in fact anything but. It was built around Nintendo‘s multi-billion dollar Pokémon IP and developed by Niantic, a company spun out of Google. Without those critical corporate backing, Pokémon Go would have been dead on arrival.
Glimmers of Hope for App Upstarts
In light of these daunting realities, it may be tempting to pronounce the mobile app era dead and buried, at least from the perspective of startups and indie developers. Indeed, some observers have done exactly that.
But while the odds are doubtlessly stacked against the little guy, all hope is not lost. Despite the category‘s stagnation, comScore still logged 13 million new app downloads per month in the 18-24 age bracket. Meanwhile, emerging markets like India, Brazil and Indonesia are just beginning to come online, potentially opening up massive new audiences.
Snapchat and Pokémon Go proved that with the right combination of innovation, execution, and luck, app breakthroughs remain possible. More recently, breakout hits like HQ Trivia and Anchor have demonstrated the potential of real-time, participatory experiences delivered via mobile. By taking full advantage of smartphone hardware and cultivating a sense of urgency and community, these apps offer features that Facebook and Google have yet to convincingly replicate.
New app stores are also emerging to challenge the hegemony of Apple and Google. Amazon‘s app store has quietly grown to offer over 600,000 titles and serves as the default marketplace for Android devices without Google Play access. Startup Aptoide has gained a foothold by focusing on geographic markets underserved by the major app stores. As the app economy matures, alternative distribution channels could erode the clout of the tech giants.
Guidance for Aspiring App Developers
For those determined to go the native app route, there are an array of tools and frameworks that can help streamline the process. Modular construction kits like Firebase allow developers to rapidly prototype, deploy and scale sophisticated mobile backends. Cross-platform development frameworks like React Native enable engineering talent to be leveraged across iOS, Android, and the web, dramatically reducing personnel requirements.
Fundamentally, app makers must recognize the reality that theirs is a hits-driven business. The odds of success for any single effort are minimal. Developers should structure their efforts to be sustainable in the face of likely failure through lean operations and parallel pursuits. They should release early, test often, and fail fast. Given App Store capriciousness, distribution contingency plans are also essential.
Ultimately, the most reliable way to strike app store gold is to target a narrow niche and relentlessly prioritize core product, design and user experience. Rigorously test your assumptions, know your key metrics, and maniacally focus on delivering value for your specific audience. Build genuine connections and harness social sharing. Budget extensively for post-launch iteration and support. If you can check those boxes, you have a fighting chance.
Building for Post-App Platforms
Of course, none of this is meant to deter mobile development across the board. For enterprises with established customer bases in the millions, building out a comprehensive app presence absolutely remains a worthwhile (if not essential) pursuit. But even then, it‘s critical not to underestimate the dominance of Google and Facebook properties with audiences that absolutely dwarf those of most companies.
Those intent on pushing the boundaries of connected devices and pocket-sized software need not confine themselves to smartphone stores. Emerging computing platforms beckon with untapped potential and virgin pastures.
The virtual reality market, spearheaded by the Oculus Rift and HTC Vive, is widely expected to cross into mainstream adoption in the coming years. Global VR revenues are projected to multiply nearly tenfold from $2.2 billion in 2017 to over $19 billion by 2021, according to Greenlight Insights. Upstart makers of VR apps and games could be poised to reap the rewards.
Amazon‘s Alexa-powered smart speaker line, which includes the wildly popular Echo, has already reached an installed base of over 30 million units. The Alexa ecosystem boasts over 15,000 voice-controlled apps (or "skills"), presenting an alluring opportunity for developers. As users grow increasingly accustomed to conversational interactions, demand for voice app development will only accelerate.
Even smartwatches, long derided as impractical and gimmicky, steadily gained traction throughout 2017. Android Wear activated over 5 million new devices and the Apple Watch saw sales jump 54% year-over-year. As battery life improves and developers craft more compelling use cases, the smartwatch could finally cross the chasm in the near future.
Ushering In the Next App Boom
When one surveys the mobile app landscape of 2016, the proverbial 800-pound gorillas are everywhere. While the smartphone ecosystem has empowered billions, the app economy has rapidly consolidated around the twin poles of Mountain View and Menlo Park.
But if tech history has taught us anything, it‘s that no empire is everlasting. As new computing paradigms take hold, the old guard inevitably yields to disruptive innovation and hungry young upstarts. One need only look to the demise of AOL, Yahoo, and Internet Explorer for proof.
The mobile epoch has matured and its giants have grown fat and complacent. But the post-mobile era looms on the horizon. The cycle will soon begin anew.
It falls on the developers, makers, and entrepreneurs of today to chart the uncharted. To wade into the unfamiliar. To look beyond apps as we‘ve come to know them. And, if they are bold enough, to build atop the foundations of the next great technological boom.
The smartphone gold rush may have ended, but new frontiers assuredly await. Get coding.