Looking at the world’s app economies at the end of 2018, China remains by far the largest in terms of usage and revenue, but the one which has undergone the most rapid change over the last two years is India. While still in its early stages, India’s app economy is maturing so fast that it must now be on the radar for every serious app developer or marketer. The numbers are impressive:
- Last year, India overtook the US as the world’s #2 market in app downloads, with 12.1 billion.
- App Annie forecasts that by 2022, India will have 37.2 billion downloads a year, a growth rate of 207% -- which makes it by far the fastest growing app market in the world.
- According to Appsflyer, India is now the #1 country in the world in number of apps installed and used per month, and has overtaken the US as the country with the highest number of non-organic installs.
- The average data use per subscriber grew 2500% from 65 MB per month in 2014 to 1.6 GB per month in 2017.
The last data point is perhaps the most telling. The app economy in India surged into life in the last two years because of a confluence of two factors: the subsidizing of 4G data, and a wave of cheap smartphones from China. The 4G revolution was started in 2016 by Jio, an upstart newcomer to the mobile market backed by Indian mega conglomerate Reliance. Offering free 4G data, Reliance Jio acquired a mind-boggling 177 million users in less than 18 months. In doing so, Jio is disrupting the mobile telecom landscape and dragging incumbents Airtel, Idea and Vodaphone into an ongoing price war. The result is more than 200 million users, mostly in India’s cities, are now reaping the benefits of 4G. Citing a report by Open Signal, Dazeinfo showed that as of April 2018 the 20 largest cities in India had more than 80% 4G coverage.
At the same time, mid-tier Chinese smartphone brands Xiaomi, Oppo and Vivo have flooded the market with competitively priced models that have many of same features as premium offerings from Samsung and Apple. In fact, Xiaomi and Samsung together accounted for more than 52% of Indian smartphone sales in Q3 2018, according to Canalys. The result has been a perfect storm, as 337 million smartphone users in India are now experiencing the kind of rich app experiences that high-speed data can provide for the first time.
Here’s the crazy thing: 337 million is only 25% percent market penetration! At the same time, only 19% of today’s app market comes from outside India and China. This represents a huge opportunity for western app developers and marketers. And despite the explosive growth in app usage over the last two years, when it comes to revenues, it’s still early innings for India’s app economy. Despite being the #1 country in the world in app downloads in Q1 2018, India was ranked 29th globally with only $47 million in estimated revenue on iOS and Google Play combined, a tiny fraction of the $3.2 billion generated in the US.
Video/streamed entertainment is among the most popular type of app, which is understandable since many users don’t have wired broadband. Netflix is one of the top subscription based apps in India. Other well-known western apps that are highly popular in India are Tinder, Facebook and Whatsapp. In addition to entertainment and social media, e-commerce (retail, travel, banking and payments) and games are categories with large growth potential, especially as the market expands to more rural customers, many of whom will be experiencing such services for the first time on a mobile platform.
One sign of the market’s rapid maturation is the rise of non-organic installs. Unlike the early days (say 2010) in the US, when there were so few apps that discovery took place in app stores, a new user in India is inundated with over 2 million apps from which to choose. As a result, the need for paid installs is rapidly increasing, with non-organic installs more than doubling over the last year. eMarketer predicts that mobile ad spend will increase from over $800 million this year to $1.7 billion in 2021. This represents a terrific opportunity for apps that gain traction as the vast majority of impressions – 86% according to eMarketer – are in-app as opposed to mobile web.
While current cost per install rates are relatively low and advertising is cheap in India, serious challenges remain. As might be expected from new users who are still in an “experimental” phase, app retention rates are low – between 4.2% (non-organic) to 8.5% (organic) at 30 days. But even more difficult is the number of app uninstalls: an overall rate of 32% after 30 days. This is because the inexpensive smartphones in India have less storage space, forcing users to delete apps to make room for new ones. This will likely change over time as phones inevitably get more storage, but for now it’s like “Game of Thrones” for apps in India.
In summary, India now has an installed user base larger than the population of the US, but is still very early in terms of developing an app economy. For global app developers and marketers, if you don’t have a strategy for India, it’s time to start working on one. It’s naïve to think you’ll get traction on organic installs alone, so you’ll need to deploy all the best targeting and especially retargeting techniques you would use in more mature markets. As in any unique country, localization is important as is tailoring your product to meet the specific needs of the market. Given the mobile first/mobile only nature of many Indian users, there are lots of opportunities for creative developers to make inroads against the Indian and Chinese incumbents, especially for social media and games. The good news is that many top western ad platforms now have well established operations in India and can serve as a good way into the market for new entrants.
