App Annie has just released their report for Q2 2014. In their accompanying blog, they emphasize large growth in Google Play’s downloads in Brazil, Thailand and India. However, in contrast to the most recent report where they noted marked growth in Google Play revenue, this time they do not mention revenue at all in the blog.
This suggests that Google Play revenue was not too good. Here, I will try to reverse engineer the data that App Annie disclosed. I will try to figure out how Google Play revenue grew in relation to iOS App Store revenue growth.
What App Annie’s report reveals
Regarding revenue growth, App Annie’s report (the one that you can download for free here) only provides us with the following information;
iOS retained a strong lead in app store revenue over Google Play. In Q2 2014, the iOS App Store provided around 80% more revenue than Google Play. Mobile powerhouses China and Japan were the primary drivers of iOS revenue for Q2 2014. Up-and-coming countries Taiwan, Kuwait, and Turkey also contributed significantly to iOS revenue, each growing more than 30% quarter-over-quarter.
An accompanying press release actually has more details;
In Q2 2014, the iOS App Store provided around 80 percent more revenue than Google Play, down from 85% the previous quarter. Mobile powerhouses China and Japan were the primary drivers of iOS revenue for Q2 2014. Taiwan, Kuwait, and Turkey also contributed significantly to iOS revenue, each growing more than 30 percent quarter-over-quarter.
So in Q1 2014
[iOS App Store revenue] / [Google Play revenue] = 1.85 (approximate)
and in Q2 2014
[iOS App Store revenue] / [Google Play revenue] = 1.80 (approximate)
This alone isn’t enough to get a good picture. We need to know how iOS App Store or Google Play grew in revenue from Q1 to Q2. Since I couldn’t find this data, we assumed it to be in the range of 2% to 20% and analyzed the results for each assumption.
Absolute iOS App Store revenue growth exceeds Google Play if growth > 4%
If we assume that iOS App Store grew 10% from 1Q to 2Q and combine the App Store / Google Play ratios, we can derive the following table;
Here we see that Google Play would grow 13% while iOS App Store would only grow 10%. However, since iOS App Store is much bigger, iOS App Store actually grows more in absolute terms compared to Google Play (18.5 vs. 13.1). This means that iOS App Store is widening its lead.
The above table assumes 10% growth for iOS App Store, but we don’t have any information to tell us if this is true or not. App Annie does not tell us what the growth was. Therefore, we tested various scenarios for iOS App Store growth, resulting in the following graph.
Here we see that for any iOS App Store growth above 4%, iOS App Store growth in absolute terms will be larger than Google Play absolute growth.
App Annie previously provided us a chart for iOS App Store and Google Play game growth. Since the game category constitutes 75% of total iOS App Store revenue, this chart should give us an idea of what the growth of the total iOS App Store revenue should be like. From this graph, it is reasonable to estimate 10-20% quarterly growth for 2Q14.
Looking at our various scenarios, this indicates that iOS App Store absolute growth was 40-60% higher than Google Play. This means that the revenue gap between iOS App Store is widening quite rapidly.
Since the App Annie narrative for Google Play growth has consistently been that Google is catching up with the iOS App Store, it is understandable that App Annie is shying away from highlighting these numbers.