Apple's App Store Developer Payouts Accelerate Again (Aug-2015)
On August 6th, it was revealed that Apple's App Store saw record billings in July-2015 with $1.7 billion in sales, driven primarily by growth attributed to its revitalized smartphone lineup as well as its continued momentum in China. Along with its record billings, Apple also revealed that it has paid a cumulative $33 billion to developers since the inception of the App Store in July-2008. Apple provides data related to developer payouts sporadically throughout the year - the historical trend has been at least twice a year (January and June), but as seen below, there have been instances where they have provided three updates (e.g., 2013 and 2015). I have been tracking this data as seen below:
A few points of interest:
- The $3 billion incremental payout between June-2015 and August-2015 was achieved in 59 days, leading to a per-day payout of $50.8 million.
- The $50.8 million payout is a 53.6% acceleration vs. the previous per-day payout measured when the company reported $30 billion of developer payouts at WWDC in June. This was was highest acceleration in developer payouts seen since June-2013.
- Apple has already paid out $8 billion in 2015 alone, which aligns with the announcements made in January-2015 ($25 billion in cumulative payouts) and August-2015 ($33 billion in cumulative payouts).
- Based on the above announcements, Apple paid developers $3 billion in 2012, $8 billion in 2013, and $10 billion in 2014. Considering that Apple has already paid out $8 billion through July-2015 and the number appears to be accelerating, it's likely that cumulative developer payouts will reach $38B+ by calendar year-end (implying $13 billion of payouts in 2015).
Here's the some things that are a bit mystifying to me:
- Very few, if any, people I know pay for apps, yet the developer payout numbers suggest that a crap-load of people are buying apps. Since developers get 70% (roughly) of app purchase revenue, the 2014 payout of $10 billion implies $14 billion of app purchases. As a point of reference, Netflix reported $5.5 billion of revenue in all of 2014.
- While one would logically assume that developer payout growth is a function of the iOS ecosystem growth (e.g., number of devices sold -> installed base), is that a correct assumption? For example, if you are one of the people that buys apps and you're already in the ecosystem, you don't need to keep buying the app over-and-over as most paid apps are one-time purchases (not subscription-based). Point being, developer payouts (which is a function of app purchases) should really be a function of incremental additions to the iOS ecosystem.
- If you assume that developer payouts are a 'proxy' for incremental additions to the iOS ecosystem, then that ecosystem's growth continues to accelerate in markets that everybody calls "saturated".