Yankee Group research firm tripled its prediction of total app revenue in 2010 from $537 million to $1.6 billion, set to reach to $11 billion in 2014. Their previous prediction topped out the market at $6.8 billion in 2013. The r
evised outlook was driven by an increase in the proportion of total downloads of paid apps from eighteen percent in 2009 to nearly one-third this year. Mediapost reports that Yankee believes that app stores are "training consumers that they need to pay a few bucks for quality phone apps."
This effect is bolstered by popular apps that cost even more. MLB's At Bat 2010 ($15) and CBS' March Madness on Demand ($10) iPhone Apps are more pricey than the majority of titles. But more significant than single titles, the general level is creeping up. This year, the average paid app costs $2.85, up from $1.99 last year, as eMarketer quotes the report. Multiple titles from a single developer also up revenue, as magazine mega-publisher Hearst is planning with seventy recently released iPhone apps that are micro-targeted and 99 cents or more, with plans to add thousands more.
The free-to-paid ratio differs between carriers, with Verizon having two out of three paid. The BlackBerrys drive these numbers, which have more paid downloads proportionally.
The general level of downloads is increasing, an annual 1.6 billion predicted to rise to six billion by 2014. At highest title number per user, iPhone owners download an average of sixty per year, over three times other smartphone owners. But potential is highest with handsets that run the Android OS.
"With 60,000 Android phones being shipped every day and nearly 20,000 apps in the Android Market, we believe that Android will be the next breakout app platform," the Yankee report projects.
Categorically, the most downloads are games, search and social networking. Yankee expects that as the market saturates and developers move to Web-based cross-platform projects, "the app frenzy" will subside.