Apple CEO Tim Cook speaks at Apple’s Worldwide Developer Conference (WWDC) at the San Jose Convention Center in San Jose, California on Monday, June 4, 2018.
Josh Edelson | AFP | Getty Images
According to an analysis by CNBC, Apple’s App Store raised more than $ 64 billion in 2020.
That’s up from an estimated $ 50 billion in 2019 and $ 48.5 billion in 2018, according to the same analysis, suggesting that App Store revenue growth accelerated sharply during the Covid-19 pandemic, as people took shelter at home and more time and spent money on apps and games.
According to CNBC’s analysis, App Store revenue grew 28% in 2020, compared to 3.1% in 2019.
Apple’s App Store is an important growth area for the company. It is reported as part of Apple’s Services division, which reported revenue of $ 53.7 billion in Apple’s fiscal year 2020, which ended in September.
The money Apple earns from the App Store has become a flash point for Apple’s critics who claim it has too much power. Apple charges 30% for digital sales through its platform, with a few exceptions. Apple recently changed its pricing structure, and now it only takes 15% for businesses generating less than $ 1 million on the App Store.
A congressional subcommittee found in 2020 that Apple has monopolistic power over the distribution of iPhone apps, which, it says, generates excessive profits. Apple is being sued on antitrust grounds by Epic Games, which wants to prevent Apple from paying 30% of its games sales for iPhones, which it calls unfair. Apple has denied that the App Store has a monopoly and is currently challenging Epic Games’ allegations in court.
Apple does not disclose how much revenue the App Store earns per year. Instead, it has released data points since 2013, including the total Apple has paid developers since the App Store began in 2008.
Using those numbers, it is possible to roughly return how much revenue the App Store generated based on how much Apple paid developers in a given year. According to a press release on Wednesday, Apple has paid developers $ 200 billion since 2008, $ 45 billion more than the figure announced in January 2020. If that’s equal to 70% of App Store sales, then the App Store last grossed about $ 64 billion. year.
There are some exceptions to Apple’s cut in digital sales by 30%, and Apple’s numbers are rough, meaning total sales in Apple’s App Store are likely to be even higher. Sensor Tower, an app analytics company, estimates the App Store to achieve $ 72.3 billion in sales by 2020.
In 2016, Apple said apps only need to pay 15% for the second year of a subscription, and Apple CEO Eddy Cue emailed Amazon CEO Jeff Bezos in 2016 suggesting Apple charge a 15% fee for subscriptions who signed up through the Amazon Prime. app to close a deal, according to an email released last year by the House Antitrust Subcommittee.
But as an assumption, 30% for Apple’s opinion is closer than 15%. Analysis by RevenueCat, a company that makes software to help Apple developers bill subscriptions, found that only 16% of the apps it works with achieve a “take home” rate of over 75%. The apps that make the most money in the App Store are usually games, which are not subscription-based, but monetize in-app purchases, which are billed by Apple at 30%.
As of this year, Apple will charge smaller developers who earn less than $ 1 million per year on Apple’s platforms 15% instead of 30%. But apps are a company that delivers the most wins, according to analysts. The top 1% of app publishers generate 93% of revenue in the App Store and Google’s Play Store, according to a 2019 estimate from Sensor Tower, an app analytics company.