App Store Revenue Drops & Prices Rise - App Store News

October 7, 2022

App Store Revenue Drops & Prices Rise - App Store News

Welcome to this week’s ASO Weekly – Gummicube’s recurring segment where we discuss some of the biggest events in the mobile app industry, app store developments, and how they may affect your App Store Optimization (ASO) strategy.

This week, we’ll be exploring:

  • Why App Store revenue dropped significantly in September
  • Epic Games CEO criticizes Apple for price hikes

Revenue drops to a 7-year Low for the App Store – What Happened?

Is there anything larger at play than deepening economic worries across the tech sector? In a report by Morgan Stanley, this massive drop in revenue is the largest they’ve seen since 2015. With a revenue fall of 5% YoY in September, one of the largest hit categories on the App Stores has been mobile games with subscription and in-app purchases plummeting at unprecedented rates.

Expert input and testimony from Apple suggest two compounding factors: pre-pandemic consumption habits returning and gas prices. It appears to be a zeitgeist of external storms largely affecting the App Store. What’s more, is that App Stores in the eurozone countries have just introduced a price increase of 20% for all paid apps.

Apple has stated that consumer behaviors are reflecting pre-pandemic behaviors and at-home entertainment has finally made its full switch. People are switching back to in-person events, dramatically reducing the time they’re spending on their phones for entertainment. This has been a steady decline since 2020, but the effects of it are just now peering their uglier side.

As the war in Ukraine continues, Russia adds pressure on the gas pipeline to many of its former trade partners. Energy prices around the world have skyrocketed, gas supply contractions fight against high demand, and high interest rates are crushing disposable incomes.

What can we expect next? For any ASO expert, developer, and mobile marketer, finding ways to tighten the belt can be difficult. Apple Search Ads costs can be high during this time as well. Through ASO marketing, developers can lower their costs of ads by proving organic relevance. This is one of the most cost-effective ways of shrinking marketing costs in tight markets. Our ASO company can help.

Epic Games CEO Criticizes Apple for Price Hikes

Apple announced price hikes in September that have affected dozens of countries around the world, raising prices of apps by about 20% in each respective currency. This price hike was said to affect all eurozone countries along with 9 other countries.

To Epic Games CEO, Tim Sweeney, the price hikes are predatory to both developers and users to an extent. Mostly making the point that developers have no other platform to reach iOS users outside of the App Store, making it almost monopolistic by nature.

In a statement made addressing the issue directly, Sweeney likened the new change to turbulent relationships with tenants and landlords, citing:

“Imagine if a landlord told their small business tenant they had to increase their prices without any say in the matter or anywhere else to go. That is what Apple is doing to developers for no other reason than to pad Apple's bottom line. They are unilaterally imposing a price increase on developers across multiple countries without any justification. Developers don't have a choice but to comply because the App Store is the only way they can reach over a billion iOS users.”

This isn’t the first time Apple came under fire for these types of practices. Back in May 2022, Epic Games and Apple started a lengthy appeals process for the country's decision to rule in Apple’s favor in not introducing a third-party app store feature in their phones. Epic cited that the bad repercussions of supporting alternative, third-party app stores would be Apple having to "compete for its customers."

“Apple also asserts that the relief Epic seeks will compromise the security of the iPhone. But that is untrue. The operating system Apple uses in its Mac computers ("macOS") does not include the challenged restraints found in the iPhone operating system ("iOS"), and Apple consistently touts the Mac's security. Apple also permits multiple alternative payment solutions in the App Store for apps selling physical goods, confirming that the requirement to use Apple's in-app payment solution, IAP, for digital goods serves no procompetitive goal. If Epic prevails, the App Store would not be dismantled. No customer would ever be required to use any of the things Apple complains about--an alternative app store, direct downloads for app distribution, or an alternative payment solution. The difference is that Apple would have to compete for its customers.

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Want to learn more about App Store Optimization? Contact Gummicube and we’ll help get your strategy started.